U P L I F T

Upgrading People’s Lives via Inclusive

Financial Training
 Foreword

Shree Chandrakant Patil

Minister of Higher and Technical Education

(Maharashtra)

Financial inclusion is not just a concept; it is a powerful tool that can uplift the lives

of the underprivileged and foster inclusive growth across every part of our great

nation.

As the Minister of Higher and Technical Education (Maharashtra), I am delighted to

introduce this remarkable book, "UPLIFT," which enfold our mission to prioritize

the youth of our society and empower them with the means to transform their

lives.

Over the past nine years, in the leadership of the honourable Prime Minister Shri

Narendra Modi the government has taken significant steps in the realm of financial

inclusion. Starting with the landmark Jan Dhan Yojana that brought millions into

the formal banking system and later expanding to encompass insurance and

pensions through the Jan Suraksha schemes, we believe we have miles to go and

the book 'Uplift' falls in the same direction.

The National Strategy for Financial Inclusion (NSFI) 2019–2024 has been

significant in strengthening these efforts, providing a strong framework for

progress. The aim is to enhance the knowledge of our fellow citizens in managing

their finances effectively, enabling them to make informed decisions that will

improve their socio-economic status.

By spreading awareness and promoting financial literacy, we strive to bridge the

gaps and ensure that no one is left behind in this journey towards an inclusive and

prosperous India. I trust that this book will serve as a valuable resource for

inspiring individuals and promoting financial inclusion at all levels. Together, let

us forge a future where every citizen has equal access to financial opportunities,

regardless of background or circumstances.

With warm regards

Minister of Higher and Technical Education

Government of Maharashtra

i
 Foreword

Shree CA Kamal Poddar

Managing Director

Choice International Limited

At the Choice Group , we believe that access to effective financial education is a

fundamental right that should be available to all. It is with great pleasure that I

introduce the book, "Uplift," which serves as a beacon of knowledge and

inspiration in the financial inclusion arena.

Our ongoing collaboration with the Maharashtra government in implementing the

financial literacy program for young students is a testament to our commitment to

this cause. The Choice Group has always stood out as a sponsor of meaningful social

initiatives across various sectors, and financial inclusion is at the heart of our

endeavors.

We firmly believe that "Uplift" abridges our persistent commitment to financial

inclusion for all. It is a comprehensive guide that delves into the principles of

personal finance, illuminating the pathways to economic independence and

financial well-being. With its practical insights and real-life examples, this book

will serve as a valuable resource for young students to foster positive attitudes

towards financial responsibility and empower young minds to make sound

financial choices

I would like to express my deepest gratitude to the authors of "Uplift" for their

dedication and expertise in creating this exceptional work. I also extend my

heartfelt appreciation to the Maharashtra government for their unwavering

support and collaboration in our shared mission to foster financial literacy.

I invite you to embark on this enlightening journey through the book "Uplift" and

join us in our pursuit of a financially inclusive society. Together, we can uplift and

empower young minds to a brighter and more prosperous future for all.

With warm regards,

Managing Director

Choice International Limited

ii
 Contents
Chapter 1 : Basics of Personal financ
What is personal finance

How does personal finance work

Save to plan future goal

Importance of Saving and Budgeting

Chapter 2 : Banking Fundamentals

The role of banks in societ

Types of Bank Accounts and Their Function

Digital Bankin

Technology and Bankin

Different types of online financial transaction

Digital Mode of Paymen

Relevant Government Schemes and initiatives

Chapter 3 : Overview of key concepts and

components of Financial Market
What is a financial market

Capital Marke

Types of capital market

Primary Marke

Secondary Marke

Introduction to the stock marke

What is the stock market

How to buy and sell in stock markets?

iii
Chapter 4 : Deeper insight into Financial Instrument

What are the different types of investments

Equitie

Stock

Indice

Exchange Traded Funds (ETF

Derivative

Future

Option

Mutual Fund

What is a mutual fund

How does a mutual fund work

Categories of mutual funds

How to invest in mutual funds

Systematic Investment Plan (SIP

Corporate FDs

Chapter 5 : Learn the art of investing : Investment

Fundamenta

Trading vs Investin

Understanding Risk and Rewar

How to research stocks

Types of analysi

Technical analysi

Fundamental analysi

Trading & Investment strategie

Portfolio managemen

How to allocate your assets among different types of

investments?

iv
Chapter 6 : Debt management is an art, Strive to
become a maste
What is a loan
Types of loan
Loan provider
Responsible Borrowin
Credit scor
Relevant Government Schemes and initiatives

Chapter 7 : Opt for Safety with Insuranc

Insurance Fundamental
Types of insuranc
Life Insuranc
Health Insuranc
Motor Insuranc
Property Insuranc
Needs for Insuranc
Choosing the best optio
Insurance claim
Insurance Fraud
Relevant Government Schemes and initiatives

Chapter 8 : Secure your golden years financially via

Retirement Plannin
Building a secure Future: Retirement Planning and Pension
Security
Why do you need retirement planning and pension security
How to plan retirement?

v
 Role of PFRD

Relevant Government scheme and Initiative 

Chapter 9 : Risk Management for uncertain time

Managing financial risk

Diversification, Insurance and Hedgin

Emergency funds and contingency planning

Chapter 10 : Career and employment

Introductio

Pursuing career in Financ

Career opportunitie

Agent platforms for financial servic

Who is an Entrepreneur

Stages of building and expanding the busines

Know about Startup

Relevant Government Schemes and initiative

Do’s and don’t for good financial healt

Ace the interview

Writing a good C

Answering interview questions

vi
 CHAPTER 1

Personal Finance: 

Basics of personal finance

Personal finance is highly relevant in daily life as it empowers individuals to

manage their money wisely, make informed decisions, and achieve financial goals.
It plays a crucial role in ensuring financial security, reducing stress, and enabling
individuals to make choices aligned with their values and aspirations.

Let's take a closer look at what personal finance is all about.

Personal finance is the process of planning and managing personal financial

activities such as earning an income, spending, saving, investing, and protecting
one's assets.

It's a personalised roadmap to financial success, empowering you to create tailored

plans that turbocharge your progress and unlock your dreams.

Meet Riya and Rohan,

1
Riya and Rohan, two children, find themselves perplexed by their parents' constant
arguments over household expenses. The parents often discuss their desire to save
for a new car, TV, refrigerator, and medical expenses, with each family member
having their own preferences. The conflicting priorities within the family have led
to a state of constant disagreement, leaving everyone unsure about what truly
matters.

However, it is crucial for the family to recognize the financial implications

associated with these purchases. They must carefully evaluate their income,
expenses, and savings before committing to any major expenditure. In this
complex scenario, the family comes to a consensus of getting a health insurance.
This decision is apt under the given scenario because it is essential for the house
members.

Personal finance is crucial in the preceding scenario since it enables the family to
make informed decisions regarding their spending and savings. They can decide
whether purchases are affordable and correspond with their financial objectives by
assessing their income and priorities. Considering their own financial resources
helps them to achieve an agreement.

Let us understand how personal finance works?

Personal finance encompasses five key areas that are essential for your financial
success. Let's break them down and understand how they contribute to your overall
financial well-being:

Income Savings Spending Investments Protection

1. Income: Income is the money you earn through various sources, such as a job,
freelance work, or investments. It's important to manage your income effectively
by budgeting and ensuring that you have a steady flow of money to cover your
expenses, savings, and investments.

2
2. Savings: Savings involves setting aside a portion of your income for future needs
or emergencies. It's crucial to establish a savings habit and create an emergency
fund that can cover at least 3-6 months' worth of living expenses. Savings act as a
safety net, providing financial security and peace of mind.

3. Spending: Managing your spending is essential for maintaining a balanced

financial life. It involves tracking your expenses, prioritising needs over wants, and
making conscious choices about how you allocate your money. Budgeting plays a
key role in controlling your spending and ensuring that you live within your means.

4. Investments: Investing is a way to grow your wealth over time. It involves

putting your money into various financial instruments with the aim of generating
returns. Investing allows you to potentially earn passive income, build wealth, and
achieve long-term financial goals, such as retirement or funding education.

5. Protection: Protection is a crucial aspect of personal finance as it involves

managing risks and safeguarding your financial well-being. This includes obtaining
appropriate insurance coverage to protect against potential risks, retirement
planning, etc.

By addressing these five key areas of personal finance, you can create a strong
foundation for your financial journey.

Activity

Here is an activity that you can do with your family to help them understand
the flow of money in household expenditure:

Make a list of all of your income. This includes all of the money that your
family earns, such as salaries, wages, and other forms of income
Make a list of all of your expenses. This includes all of the money that your
family spends, such as rent or mortgage, utilities, food, transportation, and
other expenses
Subtract your expenses from your income. This will give you your net
income, which is the amount of money that your family has left after all of their
expenses are paid
Decide how much of your net income you want to save. This could be for a
rainy day, a down payment on a house, or retirement
Set a budget for your spending. This will help you to make sure that you don't
overspend.

3
Once you have completed this activity, you will have a better understanding of
how well your family is managing funds. This will help you to make better financial
decisions and to reach your financial goals.

List all Income List all Expense

Total Income: Total Expense:

Total Income Total Expense Total Saved

- =

Beware of little expenses. A small leak will sink a great ship.” - Benjamin
Franklin

"Be sure to think about all the details, big and small."

"Don't overlook any details, no matter how small it is."

"The more detail you put into this activity, the more effective it will be."

4
Create a habit of it

The first step to becoming financially fit is to make wise financial decisions.

Paying yourself first is the simplest way to save money. That entails putting away
some of your earnings and saving them in a savings account. Making saving a daily
habit is the key to achieving financial independence. You'll position yourself for a
better financial future by starting early and saving consistently.

Get Savvy at
savings

You should set out the money you get for your different goals. These objectives can
be divided into short-term, medium-term, and long-term categories. By gradually
saving money, you can accomplish the goals you set.

Check your money’s growt

You can keep your money secure and earn interest by using a savings account.
With your parents' assistance, you may create a savings account and begin
saving at any age

Your savings will grow by a specific proportion each year if you create a savings
account and deposit money into it. This is known as interest

Your money will increase more quickly the longer you leave it in a bank with no
transactions taking place as you can earn an interest on the amount saved. The
amount of times you take money out of your savings account should be kept to a
minimum, and you should only do so when absolutely necessary.

5
Taking it a step further

Make your aim clear. A plan is what distinguishes a dream from a goal. Using the
instructions below, consider what you need to do to attain your objective.

You will be assisted by this tool in the following ways

Decide what is important to you
Make a commitment to changing your life for the better
Create a strategy to assist you reach your objective.

Methods for finding ways to save mone

Instead of purchasing what you need, take advantage of free and public
resources like your neighbourhood library

TIPS: Remember to return your things before the due date to avoid late penalties.

Maintain your vehicle. Keeping up with oil changes and tyre pressure can help
you save money on gas and repairs.
Shop around for vehicle insurance. You may be able to save money by selecting
less expensive coverage that still fulfills your requirements
TIPS: You have to save more in your emergency fund if you raise your insurance
coverage.

Shop groceries based on unit pricing. Sometimes buying in bulk doesn't end up
saving you money
Bring your own lunch to school or office. Packing your lunch is nearly always less
expensive than eating out
Designate a "no spend day" once every week. Make a weekly plan for a free
family night!

6
Building a Budget

THIS IS A BALANCING ACT.

You want to get a new phone but you also need to buy a jacket. How do you decide?

Setting your financial objectives and working towards them with a strategy in mind
can help you to make wise financial decisions. A personal budget is a strategy that
enables you to allocate the money you make to savings, costs (such as lunch,
transportation, or entertainment), or debt repayment (including any loans you may
have taken out).

Understanding the difference between what you need and what you want is crucial
when making a budget.

Needs

Food Shelter Clothing

Wants

Designer
Dine out Expensive
clothing Car

Remember to prioritise your necessities before thinking about saving for what you
want. A budget may help you evaluate not just your immediate needs and desires,
but also prepare you to attain your long-term financial objectives. You may have

7
some short-term objectives that you can complete in a matter of weeks, as well as
other long-term goals that will take years to complete.

At last we can say…

Saving and budgeting are two interrelated financial practices that are crucial for
achieving financial stability and reaching long-term financial goals. Here are their
importance

Building Financial Security: Saving involves setting aside a portion of your

income for future needs or emergencies, while budgeting helps you allocate
your income effectively to cover expenses and prioritize savings. By combining
the two, you create a safety net that protects you from unexpected expenses and
helps you avoid debt

Achieving Financial Goals: Whether it's buying a home, starting a business, or

saving for retirement, setting and achieving financial goals requires a
disciplined approach. Budgeting allows you to track your income and expenses,
ensuring that you have enough funds available to save towards your goals.
Saving regularly and adhering to a budget enables you to make progress towards
your objectives over time

Managing Income and Expenses: Budgeting helps you gain a clear

understanding of your income and expenses. By creating a budget, you can
identify areas where you might be overspending or where you can cut back. This
knowledge allows you to make informed decisions about your spending habits,
ensuring that you live within your means and have sufficient funds to save

Developing Financial Discipline: Saving and budgeting cultivate financial

discipline, which is essential for long-term financial well-being. Saving
requires setting aside money from time to time, even when it might be tempting
to spend it. Budgeting helps you prioritize your spending and make conscious
choices about where your money goes. By practicing these habits consistently,
you develop the discipline necessary to make responsible financial decisions

Handling Financial Emergencies: Life is unpredictable, and unexpected

financial emergencies can arise at any time. By saving and budgeting together,
you create a financial cushion to handle these emergencies. Having savings
allows you to cover unexpected expenses without resorting to high-interest
debt or depleting your regular budget. It provides peace of mind and helps you
navigate challenging times more effectively.

8
 CHAPTER 2

Banking Fundamentals

Y ou want to store your money safely, you go to a bank. You need to borrow money,

you require a bank. If you want to transfer you money, it is done through a bank.

Also, there are various types of bank accounts which can be opened in any Public or

Private sector banks with varying rates of interest based on the average amount in

these accounts.

With so much significance attached to them, it is time to understand banks in

detail. Or how does it work? What role does it plays in a society? Well, we are

available to assist you on such questions popping in your mind right now.

Banks are institutions that connect savers and borrowers to keep economies

running efficiently. They are authorized to accept deposits and provide loans.

Let’s say, you have ₹ 10,000 that you won't need for, say, a year and want to

make money out of it in the short term. Or if you want to buy a house and have

to borrow ₹ 15, 00,000, repaying it over a period of 30-years.

For a person working alone, it would be difficult, if not impossible, to locate a

borrower who needs exactly ₹10,000 for a year or a lender who had ₹15,00,000

available for 30 years.

Nominal interest rate

It is the rate of interest which is not adjusted with inflation.

Banks lend money for various purposes, such as personal loans, mortgages,

business loans, and working capital financing. Banks also accept deposits from

individuals, businesses, and other organisations. These deposits can be in the form

of savings accounts, current accounts, fixed deposits, or other specialised deposit

products. Banks facilitate payments and fund transfers on behalf of their

customers. They issue debit cards, credit cards, and provide online banking

services, enabling customers to make payments, transfer funds, and manage their

accounts conveniently.

9
money to the bank) and borrowers (people who borrow money from the bank).
Interest is the amount that banks pay for deposits as well as the income they
receive on the loans granted.

Now let's understand the different types of Bank Accounts and their functions

Savings Account

Who can open: Individuals (residents or

nonresidents), Associations, Societies, educational
institutions, Hindu Undivided Family, and Non-
Profit Organisation are all eligible as long as the
account isn't used for trading.

Deposit provisions: The RBI has established a daily

cash deposit restriction of one lakh rupees for
savings accounts. Any sum exceeding this in a single
day may be reported to the tax authorities, making
them extra alert. The annual cash deposit l

Withdrawal provisions: You can withdraw funds from your savings account at any
time; however, some financial institutions may limit you to six "convenient"
transactions each month before charging a fee.

Functions:
Get Savvy at
There is no limit to how many times the account user can deposit money into the
account
savings
The annual interest rate ranges from 4% to 6%
Internet banking service, making payment of bills, ATM facility, Debit card, are
provided
Students, working professionals, retirees, etc. can all benefit from this kind of
account

Current Account

Who can open: Individuals, partnership firms, private and public limited
companies, HUFs/ specified associations, societies, trusts etc.

Deposit provisions: There are no limits on the number of deposits, but the bank
does not provide any interest rates; instead, it charges the customer an interest
rate for keeping a current account.
10
Withdrawal provisions: There is no withdrawal limit.

Functions: 

It does not have a set maturity date.

There is a facility for overdrafts.

Customers have the option of withdrawing a greater amount at once.

Banks also provide direct debit services with these accounts, allowing consumers to
set up automatic payments from their accounts

Fixed Deposit Account

Who can open: Individuals and businesses

Withdrawal provisions: Withdrawals are not permitted prior to the maturity date; a
penalty may apply.

Functions:
You may pick a fixed deposit for a term ranging from 7-14 days to 10 years. This
is why an FD is often referred to as a term deposit
For the general people, FD interest rates vary from 3.00% per annum to 9.10%
per annum
The interest rate on your fixed deposit is determined by the maturity length or
tenure of the FD
Get Savvy at
The interest rate stays constant, regardless of any changes caused by market
volatility

savings
If you need money right away, you can get a loan against your fixed deposit.This
prevents you from closing your FD prematurely

Recurring Deposit Account

Who can open: Individuals

Deposit provisions: RD gives consumers the freedom to put aside a fixed amount
each month and save money easily.

Withdrawal provisions: An RD account has a limited duration in contrast to a

savings account, from which you can withdraw your money whenever you choose.
You can incur penalties or forfeit interest earned on the investment if you take the
money out before the scheduled maturity date.

11
Functions
Depending on the bank, you may start a recurring deposit account for as little as
Rs. 100
In most recurring deposit accounts, the payment is predetermined and must be
placed on the same day each month. Some plans provide quarterly or bimonthly
payments
On the same day, all of the recurring deposit payments become due
A recurring deposit's duration is negotiable and up to the depositor. Although
banks may set a minimum duration for an RD, its true duration is determined by
the depositor and his financial needs
Recurring deposits earn interest at a rate that is comparable to that of a fixed
deposit account
If the interest generated on a recurring deposit account does not exceed Rs.
10,000, no tax is withheld from it
The depositor is eligible for a loan up to 95% of the amount of the recurring
deposit
The interest collected on a recurring deposit is added to the depositor's taxable
income.

Digital Banking

Get Savvy at
No Cash savings
Go Digital

Digital banking is the digitization of traditional financial services. Customers of a

bank can access banking services and products over an electronic/online platform
using digital banking. Digital banking entails digitising all banking processes and
replacing the bank's physical presence with an eternal online presence,
eliminating the need for customers to visit a bank.

Technology and banking

Automated Teller Machine (ATM) - An ATM is a specialised
computer that allows you to withdraw cash, depositing
checks, and checking the most recent transactions and
account balance.

12
 Debit card - It is a multi-purpose card that may
be used for online and offline transactions as
well as cash withdrawals from ATMs

Credit card - A credit card is a small rectangular

piece of plastic or metal provided by a bank or
financial services company that enables
cardholders to borrow cash to pay for products
and services at merchants who accept cards.

Scrutinise

Swiping your card and seeing the bank balance unchanged can lead to spending
more than you can actually afford. And once you fall behind on your payments,
it’s very easy to end up in a vicious cycle of debt.

Internet banking - It is often known as online

banking or e-banking, is a digital platform
that allows bank customers to conduct
financial transactions via the Internet.
Internet banking usually provides many, if not
all, of the same services as a traditional bank
facility, such as deposits, transfers, and
payments.

Different types of online financial transaction

Electronic Clearing Service - Bulk transfers often employ the Electronic

Clearing Service, also known as ECS, which is a technique of electronically
transferring payments. For funds that have a repeating or cyclical character, this
method applies
National Electronic Funds Transfer - One-to-one financial transfers are made
possible via the National Electronic Funds Transfer (NEFT) payment
mechanism. People can electronically transfer funds from any bank branch to
another bank branch that is participating in the payment system by using NEFT.
The NEFT system allows for the settlement of funds transfers in 23 half-hourly
batches rather than in real time
Real Time Gross Settlement - Another payment mechanism, known as Real-
Time Gross Settlement (RTGS), credits funds to the beneficiary's account in
real-time and on a gross basis. Large value transactions that need and get
immediate clearance are the main use cases for the RTGS system.

13
 Making it simple

"Real-time" means that RTGS transactions undergo processing as soon as the

sender initiates them, and "gross settlement" denotes that instructions for the
transfer of money are carried out one-to-one.

Immediate Mobile Payment Services - The National Payment Corporation of

India manages the real-time quick inter-bank payments transfer system
known as Immediate Mobile Payment Services (IMPS). In contrast to NEFT and
RTGS, IMPS is open 24/7 throughout the whole year, including on holidays.

Digital Mode of Paymen

E-wallets - A form of an electronic card called an e-
wallet is used for online purchases using a computer
or a smartphone. It serves the same purpose as a
credit or debit card but here you don't require a card,
you just need a smartphone to make payments. An E-
wallet must be connected to the user's bank account.
Unified Payments Interface - The UPI is a system
that integrates various bank accounts, smooth fund
routing, and merchant payments into a single mobile
application (of any participating bank). Additionally,
it supports "Peer to Peer" collection requests that can
be planned and paid for according to need and
convenience. For the mobile platforms of Android,
Windows, and iOS, each Bank has its own UPI App

Bharat Interface for Money - A payment software

called BHIM uses the Unified Payments Interface
(UPI) to enable simple, quick, and effortless
transactions. Using their UPI ID or by scanning their
QR code with the BHIM app, UPI users can send direct
bank payments to anybody on the platform. A UPI ID
can also make a money request through the app.

The National Payments Corporation of India (NPCI)

pioneered and created BHIM, which the Honourable
Prime Minister of India, Narendra Modi,
conceptualised and inaugurated on December 30, 2016,
to promote financial inclusion across the country and a
society that is empowered by technology.

14
 Aadhaar Enabled Payment System - By enabling
Aadhaar verification at point of Sale (PoS) or micro
ATMs, AEPS enables consumers to make payments
using their Aadhaar numbers. Through a micro ATM
or business correspondent (BC), customers can
execute all transactions. With the exception of fund
transfers, which require you to visit a specific bank
BC, you can use any bank BC for these other
transactions. Your bank account has to be
connected to Aadhaar in order to use AEPS.

A major step towards advancing financial inclusion

in a mission mode was reached with the publishing
of the Nachiket Mor Committee Report in 2014.

Initiatives of the government to promote inclusive financial growth

Jan Dhan Yojana

Pradhan Mantri Jan-Dhan Yojana (PMJDY) is a

National Mission for Financial Inclusion that
aims to provide inexpensive access to financial
services including basic savings and deposit
accounts, remittance, credit, insurance, and
pensions. Persons who do not have any other
accounts can open a basic savings bank deposit
(BSBD) account at any bank branch or Business
Correspondent (Bank Mitra) outlet under the
plan.

Advantages of PMJD

For each unbanked person, one basic savings bank account is established
In PMJDY accounts, there is no necessity to have a minimum balance
In PMJDY accounts, deposits obtain interest
PMJDY account holders receive a Rupay Debit card
Accident Insurance Coverage of Rs.1 lakh (increased to Rs.2 lakh for new PMJDY

15
 accounts created after 28.8.2018) is available with the PMJDY account holders'
RuPay card
An overdraft (OD) option of up to Rs. 10,000 is provided to approve account
holders
Direct Benefit Transfer (DBT), Pradhan Mantri Jeevan Jyoti Bima Yojana
(PMJJBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana
(APY), and Micro Units Development & Refinance Agency Bank (MUDRA)
schemes are available to PMJDY accounts.

Direct Benefit Transfer 

The Direct Benefit Transfer (DBT) scheme of the

Government of India is a government initiative that
aims to directly transfer benefits to beneficiaries,
bypassing middlemen. The GOI provides subsidies
and other benefits directly to the beneficiaries' bank
accounts. Banks act as the intermediaries in the DBT
process by linking the beneficiaries' bank accounts
with their Aadhaar numbers (a unique identification
number issued to Indian residents). The system was
created to make it easier to receive government
benefits such as those provided under the National
Rural Employment Guarantee Act (NREGA), social
security pension schemes, disabled old age pension
schemes, and so on. The scheme was launched in
2013 and has since been expanded to cover a wide
range of benefits, including food subsidies, fertiliser
subsidies, and scholarships.

The provision of these services is anticipated to stimulate electronic retail payments

and allow safe and secure interoperability across institutions.

Advantages of Direct Benefit Transfe

Beneficiaries are precisely targeted through Direct Benefit Transfer
Beneficiaries would be permitted to link only one bank account to their Aadhaar
credentials in order to avoid duplication of benefits
It enables the government to reach out to both people and scheme beneficiaries
at the same time.

16
 CHAPTER 3
Financial Market: Overview of key concepts
and components

What is Financial Markets?

Marketplace Sale/Purchase Financial Products

Financial markets are the foundation of the global economy, facilitating the
movement of capital and driving economic growth. In this exploration, we delve
into the essence of financial markets, their structure, and functions. By
understanding financial markets, we gain valuable insights into their impact on
investments, businesses, and the overall economic landscape.

The financial market is a marketplace where participants engage in the buying

and selling of assets. Just like a local grocery market where vegetables are
bought and sold, financial markets involve the buying and selling of financial
instruments. However, financial markets operate under specific rules and
regulations that govern their functioning.

It serves as a platform that facilitates traders in the purchase and sale of various
financial instruments and securities such as shares, stocks, bonds, commercial
papers, bills, debentures, and cheques.

17
Within the financial market, there are two distinct segments: the money market
and the capital market. For the purpose of our discussion, we will narrow our focus
to the capital market

Capital Market

CAPITAL MARKET

The capital market is a place where individuals can buy and sell stocks, which
represent ownership or a share in a company. The capital market also serves as a
means for companies and governments to raise funds for their operations against
the shares. By investing in stocks, people have the opportunity to grow their money
over time.

The primal role is to make investments from investors who have surplus money to
the ones who are running out of it.

Types of Capital Market

Capital Market

Primary Secondary
Market Market

18
Primary Market

The primary capital market refers to the market where newly issued stocks are

bought and sold for the first time. It is the initial offering of these instruments to

investors, allowing companies and governments to raise capital by selling these

instruments. 

Securities

A security, in a financial context, is a certificate or other financial instrument

that has monetary value and can be traded. Securities are generally classified as

either equity securities, such as stocks and(or) debt securities, such as bonds

and debentures.

Secondary Market

A secondary market is a marketplace where investors can readily purchase and sell

securities that have already been issued in the primary market. It is also known as

the market for dealing with second hand securities.

This market helps participants such as buyers and sellers match their buying and

selling orders.

Stock Market

The stock market is a place where people can

₹ buy and sell shares of companies.

When you buy a share of a company, you

become a part-owner of that company.

However, it's important to remember that

investing in the stock market comes with

risks, as the value of shares can go up or down

depending on various factors.

19
What is a share?

Shares of a company represent ownership units that

investors can buy and sell in the stock market. 

Who is a shareholder?

Shareholders have the right to receive a share of the

company's profits as dividends and are responsible
for any losses incurred by the company. In essence,
being a shareholder means owning a percentage of
the issuing company that corresponds to the number
of shares purchased.

What happens after you own a share?

After you own a share it is stored in a Demat account.

A demat account helps investors hold shares and
securities in an electronic format. This kind of
account is also called a dematerialised account.

Where are these demat accounts held?

Shares are stored in depositories. Depositories

function in a manner similar to a bank. Just as you
deposit and store money in a bank account, a
depository allows you to store securities in a Demat
(dematerialized) account.

Major depository institutes in India are NSDL

(National Securities Depositories Limited) & CDSL
(Central Depositories Services Limited).

Who is a depository participant?

A depository participant (DP) is an entity or

intermediary that acts as an intermediary between
investors and the depository. A DP provides various
services related to the opening and maintenance of
Demat accounts, facilitating the transfer and
settlement of securities, and handling other related
transactions on behalf of investors. Investors
typically interact with the DP for their Demat
account-related activities and transactions in the
stock market.

20
Who is a broker?

A broker acts as an intermediary between individuals who wish to trade or invest

and the exchange where the actual trades take place. Brokers are necessary because
exchanges have licensing requirements that mandate trades to be conducted by
licensed individuals. Therefore, if you want to participate in trading on an
exchange, you will need to work with a broker who can facilitate your transactions.

A depository participant functions as the link between an investor and the

depository, whereas the stock broker is the link between the investor and the
stock exchange

Where are these shares bought and sold?

Exchanges, also known as stock exchanges, are centralised marketplaces where

shares are traded. They provide a platform for buyers and sellers to come together
and execute transactions in a regulated and transparent manner.

Exchanges play a crucial role in facilitating the buying and selling of shares.
Exchanges ensure fair and efficient price discovery, liquidity, and orderly trading by
establishing rules, regulations, and surveillance mechanisms.

Two of the major stock exchanges of India are NSE (National Stock Exchange) and
BSE (Bombay Stock Exchange).

Who watchguards these institutes?

SEBI, which stands for the Securities and Exchange Board of India, acts as the
regulatory authority for the Indian stock market, safeguarding the interests of
investors. Its primary role is to promote fair and transparent trading practices in
the market. Additionally, SEBI is responsible for scrutinising, registering, and
overseeing the functioning of depositories. The establishment and operation of a
depository are subject to approval from SEBI.

What moves the stock price?

Price discovery is the process in which the market decides on the fair price of
shares. It happens when buyers and sellers come together and make offers and
bids. The price keeps changing as more people want to buy or sell. Eventually, the
price reaches a point where the amount people want to buy matches the amount

21
 people want to sell, and that becomes the final price. It's all about finding a
balance between what people want to buy and what people want to sell.

Prices of stock are decided by the buyers or sellers of the stock at a particular time.
It tends to go high if there are more buyers than the sellers and similarly with price
going down when there are more people selling it.

Good to know

In the stock market, a bull run refers to a period of time when stock prices are rising
consistently, and investor confidence is high. During a bull market, investors are optimistic
about the overall direction of the market, and there is an expectation of further price
increases. Bull markets are typically characterised by increasing stock prices, and positive
market sentiment.

On the other hand, a bear run, or bear market, is the opposite of a bull run. It refers to a
period of time when stock prices are falling, and investor confidence is low. In a bear
market, investors are generally pessimistic about the market's future and may anticipate
further price declines. Bear markets are typically marked by declining stock prices, and
negative market sentiment.

Both bull and bear runs are part of the natural market cycle and can be influenced by
various factors such as economic conditions, investor sentiment, geopolitical events, etc.
Understanding these market phases is important for investors, as they help gauge the
overall market sentiment and make informed investment decisions.

22
How are stocks listed on exchanges?

Company listing Primary Market Issue IPO

Share Distribution Secondary Market

Company listing - Listing a company refers to the process of making its shares
available for trading and investing on a stock exchange, allowing traders &
investors to buy and sell them.

Primary Market - The primary capital market refers to the market where newly
issued stocks are bought and sold for the first time.

Issue IPO - An IPO (Initial Public Offering) is the process through which a company
offers its shares to the public for the first time, enabling investors to become
shareholders in the company.

Share Distribution - After an IPO, the company's shares are distributed among the
public investors who purchased them during the offering, allowing them to become
shareholders and participate in the company's ownership and potential returns.

Secondary Market - After the shares are allocated to the subscribers of the IPO, the
shares are then listed in the secondary market.

23
 CHAPTER 4

Deeper insight into Financial Instruments

Financial instruments play a crucial role in the world of finance, enabling

individuals and organisations to manage risk, invest, and participate in various
markets. Understanding these instruments is essential for making informed
financial decisions. In this exploration, we delve deeper into the realm of
financial instruments, exploring their types, characteristics, and functions. By
gaining a comprehensive understanding of these instruments, we can navigate
the complex landscape of finance with greater confidence and insight.

What are the different types of investments?

Equities

Equity refers to the value of an investor's

10%
ownership in a company, which is measured by
the value of the shares they hold. Owning
stocks grants shareholders the opportunity to
benefit from potential increases in value of the
stock and receive dividends.

Equity represents the remaining value that

would be distributed to a company's
shareholders after settling all debts and
converting assets into cash through liquidation.

A. Stocks

Stocks, like shares of popular companies such as Reliance Industries and Tata
Group, allow investors to become partial owners and potentially benefit from the
company's success. A stock or share is the percentage of ownership in a company.

24
B. Indices

Indices measure the price performance of a basket of stocks/securities. An index is

used as a benchmark to track the performance of a specific set of securities and
compare the returns generated by a mutual fund portfolio manager
Major Stock Indices

The major stock indices in India are the BSE Sensex, representing the top 30
companies listed on the Bombay Stock Exchange (BSE), and the Nifty 50,
representing the performance of the top 50 companies listed on the National Stock
Exchange (NSE).

C. Exchange Traded Funds (ETF)

Exchange Traded Funds (ETFs) are investment funds that trade on stock exchanges
like individual stocks. They aim to replicate the performance of a specific index,
sector, or asset class. ETFs provide diversification, liquidity, and transparency,
allowing investors to gain exposure to a wide range of securities with the
convenience of buying and selling them on the stock exchange.

Major ETFs in Indi

Nifty BeES: This ETF is issued by Nippon India Mutual Fund and tracks the
performance of the Nifty 50 index
Gold BeES: Issued by Nippon India Mutual Fund, this ETF provides exposure to
the price of gold.

Here are some key advantages of investing in equity shares

Potential for Capital Appreciation: One of the primary benefits of investing in
equity shares is the potential for capital appreciation. As a shareholder, you can
profit from the increase in the stock's value over time. If the company performs
well and its stock price rises, you may be able to sell your shares at a higher price
than what you initially paid, earning a profit
Dividend Income: Many companies distribute a portion of their profits to
shareholders in the form of dividends. By investing in equity shares, you can
earn regular dividend income, which can provide a steady stream of cash flow.
Dividends can be especially attractive for income-oriented investors, such as

25
retirees.

Inflation Protection: Equities have historically provided a good hedge against

inflation. Over time, companies can increase their prices and earnings, which can

lead to stock price appreciation. By investing in equities for the long term, you have

the potential to preserve and grow your purchasing power in the face of inflation.

Liquidity: Equity shares are generally liquid investments, meaning they can be

bought and sold relatively easily on stock exchanges. This liquidity provides

flexibility, as you can convert your shares into cash when needed. However, it's

worth noting that liquidity can vary depending on the size and trading volume of

the company's shares.

Transparency and Information Availability: Publicly traded companies are required

to disclose financial information and provide regular updates to shareholders. This

transparency allows investors to make informed decisions based on publicly

available information about the company's performance, strategy, and outlook.

Process of buying and selling stocks

1. Place Order: You place your buy or sell orders through digital platforms (mobile

applications, web portals etc.) provided to you by your broker, indicating the stock

and quantity you want to trade.

2. Broker sends it to exchange: Your broker forwards your order to the stock

exchange where the stock is listed.

3. Exchange finds counterparty: The stock exchange matches your buy/sell order

with a corresponding sell/buy order from another market participant.

4. Exchange confirms to the broker: Once the trade is executed, the exchange

notifies your broker of the transaction details.

5. Broker debit/credit your account: Your broker adjusts your account balance

accordingly by debiting the cost of the purchased shares or crediting the proceeds

from the sold shares which you can see on your broker’s digital platforms.

26
 Derivatives

Derivatives are financial contracts whose value is derived from an underlying asset,
providing investors with the opportunity to speculate on price movements or hedge
against potential risks.

Underlying asset is the one that is to be bought or sold on a future date.

A. Futures

Futures are derivative contracts that oblige buyers and sellers to transact a
specified asset at a predetermined price and date in the future, allowing investors
to speculate on price movements and manage risk.

0 0
Rs.1

Imagine there is an airline called SkyFly Airlines that requires a steady fuel supply
for operations. Jet fuel prices are subject to fluctuations in the global oil market, To
manage risk and secure fuel costs for the next six months, SkyFly Airlines enters
into futures contracts with a fuel supplier, OilJet Fuels Inc. They agree on a futures
contract for 100,000 gallons of fuel per month at Rs. 80/gallon from July to
December.

In July, Jet fuel prices rise to Rs. 100/gallon, but, SkyFly Airlines remains protected
with a futures contract with OilJet Fuels. Each month, SkyFly receives fuel at Rs. 80/
gallon, despite market price fluctuations. By using futures contracts, SkyFly
Airlines hedges fuel price rise, ensuring financial stability and minimising the
impact of market fluctuations. This allows them to focus on their core operations
and financial planning while managing fuel price risks.

B. Options

Options are financial derivatives that provide the holder with the right, but not the
obligation, to buy or sell an underlying asset at a predetermined price within a
specified time period, offering flexibility for investors to profit from price
movements or manage risk.

27
In real life, options can be applied beyond financial markets. For instance, imagine
you want to buy a house but are uncertain if you'll have the funds in three months.
By negotiating an option contract with the homeowner, you obtain the right to
purchase the house at a predetermined price within the next three months by
paying an option premium. If you secure the funds and still want to proceed, you
exercise the option; otherwise, you let it expire, incurring only the premium cost.
This real-life example showcases how options offer flexibility and risk
management outside traditional financial contexts.

One thing to understand is the strike price is the predetermined price at which an
option contract can be exercised

Call Option : A call option is a financial contract that gives the holder the right,
but not the obligation, to buy an underlying asset at a specified price within a
certain time period.
Suppose you believe that the shares of a particular
Indian company, ABC Ltd., will increase in value
in the next three months. To benefit from this
potential price rise, you purchase a call option
contract for ABC Ltd. shares with a strike price of
₹500 and an expiration date of three months.

If, within the next three months, the price of ABC

Ltd. shares rises above ₹500, you can exercise
your call option and buy the shares at the lower
strike price. This allows you to profit from the price difference between the
strike price and the market price.However, if the share price of ABC Ltd. does

28
 not exceed ₹500 or decreases during that period, you are not obligated to

exercise the call option and can let it expire.In this case, you would only lose the

premium paid for the call option.

By purchasing a call option, you have the opportunity to potentially profit from

the expected upward movement in the stock price while limiting your downside

risk.

Put Option : A put option is a financial contract

that gives the holder the right, but not the

obligation, to sell an underlying asset at a

specified price within a certain time period.

Suppose you own 500 shares of a pharmaceutical

company in India. With concerns about

upcoming regulatory changes, you decide to

purchase a put option contract. The put option

has a strike price of ₹1,000 and an expiration

date of one month.

If the stock price drops below ₹1,000 within that month, you can exercise the

put option and sell your shares at the higher strike price, protecting yourself

against potential losses.

However, if the stock price remains above ₹1,000 or increases during that

period, you are not obligated to exercise the put option and can let it expire,

keeping your shares and participating in any potential gains.

Mutual Funds

The primary capital market refers to the market where newly issued stocks are

bought and sold for the first time. It is the initial offering of these instruments to

investors, allowing companies and governments to raise capital by selling these

instruments. 

A. What is a mutual fund?

A mutual fund is an investment vehicle that pools money from multiple investors

to invest in a diversified portfolio of stocks, bonds, or other securities, managed by

a professional fund manager.

Imagine three people who want to eat pizza but only have ₹100 each, and the cost of

the pizza is ₹300. To overcome this, they decide to pool their money together and

contribute ₹100 each, totaling ₹300, to buy the pizza. In a similar manner, mutual

funds work, where a fund manager collects money from various investors and pools

29
it together to create a diversified portfolio. This pooled money is then invested with

the aim of generating profits for all the investors involved.

A+B+C=

B. How does a mutual fund work?

A mutual fund works by pooling money from multiple investors to create a

collective investment fund. This fund is managed by a professional fund manager

or a team of managers. 

The fund manager's responsibility is to make investment decisions on behalf of the

investors. They analyse market conditions, research various securities (such as

stocks, bonds, or money market instruments), and allocate the fund's assets

accordingly. The goal is to achieve the fund's investment objectives, which may

include capital appreciation, income generation, or a combination of both.

Capital appreciation

Capital appreciation is a rise in an investment's market price. It is the

difference between the purchase price and the selling price of an investment. If

an investor buys a stock for Rs10 per share, for example, and the stock price

rises to Rs12, the investor has earned Rs2 in capital appreciation.

Investors purchase shares or units of the mutual fund, and the value of their

investment is determined by the net asset value (NAV) of the fund. The NAV

represents the total value of the fund's assets minus any liabilities, divided by the

number of outstanding shares or units.

30
 Net Asset Value

The NAV per unit of a mutual fund scheme serves as a performance indicator.
The NAV per unit is calculated by dividing the market value of the securities in
a scheme by the total number of units in the scheme as of a particular date.

Investors can buy or sell their shares/units in the mutual fund at the current NAV
price. When investors buy more shares, the fund manager uses that money to
purchase additional securities. Similarly, when investors sell their shares, the fund
manager may need to sell securities to meet the redemption requests.

Mutual funds provide individual investors with diversification, professional

management, and access to a wide range of investment opportunities. By pooling
resources, investors can benefit from economies of scale and potentially achieve
better returns compared to individual investing. However, it's important to
carefully consider the fund's investment objectives, risk profile, fees, and
performance history before investing in a mutual fund.

C. Categories of mutual funds 

Mutual funds can be categorised into various types based on different criteria
Equity Funds: These funds primarily invest in stocks or shares of companies.
They aim for long-term capital appreciation and are suitable for investors with a
higher risk appetite
Debt Funds: Debt funds invest in fixed-income securities like government
bonds, corporate bonds, and debentures. They focus on generating regular
income and are relatively less risky compared to equity funds
Money Market Funds: Money market funds invest in short-term debt
instruments with high liquidity, such as treasury bills, commercial papers, and
certificates of deposit. They aim to provide stability and preserve capital
Index Funds: Index funds aim to replicate the performance of a specific market
index. They invest in the same securities that make up the chosen index,
offering broad market exposure.

31
 Balanced Funds: Balanced funds, also known as hybrid funds, invest in a mix of
both equity and debt instruments. They aim for a balance between capital
appreciation and income generation, suitable for moderate risk investors.
Sector Funds: Sector funds focus on specific sectors of the economy, such as
technology, healthcare, or energy. They invest in companies within a particular
industry, allowing investors to target specific sectors they believe will perform
well
Tax-Saving Funds (ELSS): Equity-linked savings schemes (ELSS) are tax-saving
mutual funds eligible for tax deductions under Indian tax laws. These funds have
a lock-in period of three years and primarily invest in equities.

D. How to invest in mutual funds?

Here are the general steps to invest in mutual funds

Set Financial Goals: Determine your investment objectives, such as retirement
planning, saving for a down payment, or funding your child's education. Having
clear goals will help you choose the right mutual funds
Research and Select Funds: Conduct thorough research to identify mutual funds
that align with your goals, risk tolerance, and investment horizon. Consider
factors like fund performance, expense ratios, fund manager's track record,
investment strategy, and asset allocation
Open an Account: Contact a reputable mutual fund investment platform to open
an account. They will guide you through the account opening process, which
typically involves providing personal information and completing the necessary
paperwork
Determine Investment Amount: Decide how much money you want to invest in
mutual funds. Some mutual funds have minimum investment requirements, so
ensure you meet those criteria. You can invest a lump sum or set up regular
contributions through a systematic investment plan (SIP)
Choose Investment Method: There are two primary ways to invest in mutual
funds:

a. Direct Investment: In this method, you directly invest in mutual funds

through the asset management company's website or offline channels. You can
select individual funds and manage your investments independently.

b. Investment Advisor: If you are new to mutual funds or prefer professional

guidance, consider working with a financial advisor or investment professional.
They can help you select suitable funds based on your goals and risk profile.

32
 Complete the Required Documentation: Provide the necessary documents, such
as identity proof, address proof, and bank account details, as requested by the
mutual fund company or investment platform

Fund Allocation: Determine the proportion of your investment that will be

allocated to different mutual funds. This decision depends on your risk
tolerance, asset allocation strategy, and the funds' investment objectives

Make the Investment: Once your account is set up and the documentation is
complete, transfer the desired investment amount to your mutual fund account.
You can do this through online banking, net banking, or by issuing a check in
favour of the mutual fund company

Monitor and Review: Keep track of your investments periodically. Review the
fund's performance, compare it with benchmark indices, and reassess your
investment strategy if needed. It's essential to stay informed about the market
conditions and any changes in the funds you have invested in. Mutual funds in
India are regulated by the Securities and Exchange Board of India (SEBI), a
government body responsible for protecting consumer rights and ensuring
regulatory compliance.

E. Systematic Investment Plan (SIP)

A Systematic Investment Plan (SIP) is an

investment strategy that allows individuals to
invest a fixed amount of money at regular
intervals (usually monthly or quarterly) in a
mutual fund or other investment vehicles. It is
a disciplined approach to investing and is
particularly popular in the context of mutual
funds.

MUTUAL FUNDS Sahi Hai…

You must have heard or seen this phrase on radio, television, billboards, posters,
etc. But, do you know, how much is it worth to say “Mutual Funds Sahi Hai” for
you?

The Association of Mutual Funds in India (AMFI) has launched a campaign to

inform people on the benefits of investing in MFs. We will discuss the soundness of
this phrase and let you know whether it is truly worth it.

Start from as little as ₹ 10 - Most programmes have a minimum mutual fund

investment value ranging from ₹10 in SIP mode and ₹100 in lump sum mode.

33
Professional Management - Investors may not have the time or the required
knowledge and resources to conduct their research and purchase individual stocks
or bonds. A mutual fund is managed by full-time, professional money managers
who have the expertise, experience and resources to actively buy, sell, and monitor
investments. A fund manager continuously monitors investments and rebalances

the portfolio accordingly to meet the scheme’s objectives.

Risk Diversification — Fund managers in a mutual fund involves buying shares in a

range of different assets. Hundreds of different stocks and bonds can be purchased
in a number of mutual funds. A portion of the total amount is distributed in a wide
range of stocks and bonds when you purchase shares of a mutual fund.

Rupee cost averaging - This process, known as rupee cost averaging, in a way
guarantees that you automatically purchase more units when the NAV is low and
fewer when the NAV is high. For instance, a SIP of ₹1000 buys you 50 units at a NAV
of Rs. 20, but 100 units at a NAV of Rs. 10. The average price for those 150 units to be
purchased would be Rs. 2000/150 units, or ₹13.33.

Please keep in mind that rupee cost averaging does not guarantee profit and does
not safeguard against investment losses in falling markets. It simply assures
disciplined and regular stock market investment, which helps fight the natural
urge to cease investing in a loss or depressed market or to invest excessively when
markets are doing well.

The power of compounding - To put it simply, compounding occurs when interest

(or money) earned is reinvested in the original corpus and the collected corpus
continues to earn (and grow). Every time this occurs, your investment grows, laying
the road for a systematic accumulation of money that multiplies over time.

For example, a little investment of ₹1,000 a month at an interest rate of 8% for 25

years would yield ₹9.57 lakh! That implies your three-lakh investment has tripled!

348,345

184,166 180,000
73,967 120,000
60,000

But before you invest in a mutual fund, always remember Mutual Fund investments
are subject to market risks, read all scheme related documents carefully! The NAVs
of the schemes may go up or down depending upon the factors and forces affecting
the securities market including the fluctuations in the interest rates. 

34
 Corporate FDs

Fixed Deposits (FDs) are a popular investment choice in India. Apart from banks,
select corporates and NBFCs are permitted by the RBI to accept deposits for fixed
interest rates and tenures. These deposits are known as Company or Corporate
Fixed Deposits.

In times of market volatility and uncertain returns, Corporate FDs offer a way to
secure your financial future with fixed and predictable returns. Investors can opt
for regular income through pay-out options or accumulate capital through
cumulative options
Who Should Invest: Corporate FDs are suitable for short-term financial
goals.
It's important to check the company's fundamentals and credit rating for safety

Benefits: Corporate FDs offer higher interest rates than bank FDs, flexibility in
tenure, assured returns, and potential loan facility

Choosing the Best: Consider the company's background, repayment history,

and credit rating when selecting a corporate FD

Advantages: The flexibility of tenure, assured returns, and higher interest rates
mae corporate FDs attractive

Eligibility: Individuals, HUFs, clubs, corporates, associations, societies, and

more are eligible to apply for a corporate FD

Documents Required: Voter ID, PAN card, Aadhaar card, address proof, and
photographs are generally required to open a corporate FD.

Corporate FDs offer better interest rates and flexibility, but thorough research on
the company's credibility is important before investing.

Here’s an small activity for you, try to recall following given terms:

Stocks Index Bonds

ETFs Volatility Derivatives

Mutual funds Futures Returns

35
 CHAPTER 5

Investment Fundamental: Learn the art of

investing

Trading vs Investing

Trading and investing are two distinct approaches to the financial markets,
differing in terms of their objectives, time horizons, and strategies.

Let's say you have been following the stock market and you identify a particular
company that you believe has good long-term growth prospects.

In case you think about Investing you will decide to invest in a company's shares by
keeping a long-term perspective. You will carefully analyse the company's
fundamentals, financial statements, management team, and market position. You
believe in the company's potential for growth and plan to hold the shares for an
extended period, possibly years, to benefit from capital appreciation and dividends.

Your decision is based on a thorough

understanding of the company's
business and its potential value in the
long run.

On the other hand if you are trading, you will take a more short-term approach.
Instead of focusing on the long-term prospects of the company, you will analyse
the stock's price patterns, technical indicators, and market trends. Based on these
factors, you make short-term buy and sell decisions aiming to profit from the
stock's price fluctuations.

36
Your focus is on the short-term movements in the stock's price rather than the
company's underlying value.

While both investing and trading involve buying and selling financial
instruments like stocks, their strategies and timeframes differ significantly.
Investing is generally associated with a longer-term outlook, considering the
intrinsic value of a company, while trading often involves shorter timeframes
and focuses more on technical analysis and market trends.

Trading vs Investing

Trading: The primary objective of trading is to profit from short-term price

fluctuations. Traders aim to generate profits by actively buying and selling financial
instruments frequently within a short time frame.

Investing: The primary objective of investing is to build wealth over the long term.
Investors focus on buying and holding assets for an extended period, with the
expectation of earning returns through capital appreciation, dividends, or interest
payments. Short term price fluctuations will not affect your long term investment.

Now let’s make a clear distinction between them

Differences Investing Trading

Investing entails steadily and Traders increase their capital

Capital gradually increasing your funds by by always seeking for the best
Growth holding onto it. oppo unity to make trades and
rt

plan tactics for a profitable

trading ourney.
j

Style of Investing involves fundamental Trading involves technical

analysis analysis
Analysis

Risk The risk is decreased when stocks

are held for a longer time and rides
The risk is significant because
traders use leverage, which can
Involved out various market ups and downs. damage the invested funds even
with small price swings.

37
 There will always be some risk in every investment. To evaluate if it's worth
putting your money at risk, you must compare the possible reward against the
risk involved. Understanding the connection between risk and return is a
critical component in developing your investing or trading philosophy.

Ris
Risk refers to the potential for loss or uncertainty in achieving desired
investment outcomes
All investments carry some level of risk. Different investment types and
strategies have varying degrees of risk associated with them
Common types of investment risk include market risk (fluctuations in market
prices), credit risk (default by borrowers), inflation risk (eroding purchasing
power), and liquidity risk (difficulty selling an investment)
It's important to assess and understand the risk factors associated with an
investment before committing capital.

Rewar
Reward refers to the potential return or profit generated from an investment
Investments that carry higher risk often offer the potential for higher returns,
while investments with lower risk tend to provide lower returns
Investors and traders aim to balance risk and reward based on their investment
goals, time horizon, and risk tolerance
Expected reward can vary depending on the investment strategy, market
conditions, and individual factors.

Risk-Reward Tradeo
The risk-reward tradeoff is the relationship between the level of risk taken and
the potential for reward
Generally, higher-risk investments have the potential for higher returns, but
they also come with a greater chance of loss
Lower-risk investments tend to offer more modest returns but come with a
lower probability of significant losses
Investors and traders need to carefully assess their risk tolerance and
investment objectives to strike a balance between risk and reward that aligns
with their goals.

38
 Higher Higher probability of
= higher return
Risk

Risk-return
tradeoff
Lower
Lower probability of
= lower return
Risk

is applicable in
every
investment

Researching stocks is a vital step for individuals seeking to make informed

investment decisions in the dynamic world of the stock market. Hence, we will
explore some basic steps to get started with stock research:

1. Define your investment goals: Determine your investment objectives, time

horizon, risk tolerance, and financial targets. This will guide your stock selection
process.

2. Identify companies of interest: Look for companies that align with your
investment goals. Consider sectors or industries you're familiar with or have an
interest in.

3. Stock Analysis: Stock analysis involves assessing the potential of a particular

stock as an investment. It can be further divided into two primary types:
fundamental analysis and technical analysis.
Fundamental analysis: Evaluate the company's fundamentals, which include
financial statements, management team, competitive position, and growth
prospects
Technical analysis: Some investors use technical analysis to study price
patterns, trends, and trading volumes to identify potential entry or exit points
for stocks. This involves using charts and technical indicators to analyse
historical price data.

39
4. Industry and market analysis: Understand the dynamics of the industry in which
the company operates. Consider factors like market size, growth potential,
competition, regulatory environment, and technological advancements that may
impact the company's prospects.

5. Stay updated with news and events: Follow financial news, company
announcements, earnings reports, and industry trends to stay informed about any
developments that may impact the company or industry.

6. Research sources: Utilise various resources for stock research, including

financial news websites, company annual reports, SEC filings, analyst reports,
reputable financial platforms, and investor presentations.

7. Risk assessment: Evaluate the risks associated with the investment, including
market risks, company-specific risks, industry risks, and external factors that may
affect the stock's performance.

Types of analysis in brief

Vs

Fundamental
Analysis Technical
Analysis

Technical Analysis

Certainly! Here are five brief points about technical analysis:

1. Price Patterns: Technical analysis involves studying price patterns on charts to

identify potential trading opportunities. Patterns such as triangles, double tops/

40
bottoms, head and shoulders, and trendlines can provide insights into market
sentiment and potential future price movements.

2. Indicators: Technical analysts use various indicators to gain further insights into
market trends and price momentum. Examples of popular indicators include
moving averages, relative strength index (RSI), stochastic oscillator, and MACD
(Moving Average Convergence Divergence). These indicators help identify potential
entry and exit points for trades.

3. Support and Resistance Levels: Support and resistance levels are key concepts in
technical analysis. Support represents a price level at which buying pressure is
expected to outweigh selling pressure, potentially causing the price to bounce back
up. Resistance, on the other hand, is a price level at which selling pressure is
expected to outweigh buying pressure, potentially causing the price to reverse
downward.

4. Volume Analysis: Volume analysis examines the trading volume accompanying

price movements. High trading volume during a price increase or decrease can
indicate the strength of the trend. Volume can also be used in conjunction with
price patterns and indicators to validate potential breakouts or reversals.

5. Trend Analysis: Identifying and following trends is an essential aspect of

technical analysis. Trends can be upward (bullish), downward (bearish), or sideways
(consolidation). Technical analysts use trendlines, moving averages, and other
tools to identify the direction and strength of a trend. They aim to trade in the
direction of the prevailing trend to maximise potential profits.

It's important to note that technical analysis is subjective and relies on historical
price data. While it can provide valuable insights, it also has limitations, and
combining it with other forms of analysis can help make more informed
investment decisions.

Fundamental analysis

Understanding fundamental analysis, here's an overview:

1. Financial Statements: Fundamental analysis involves analysing a company's

financial statements, including the income statement, balance sheet, and cash flow
statement. These statements provide insights into the company's revenue,
expenses, assets, liabilities, and cash flow.

2. Company Performance: Fundamental analysis evaluates a company's

performance by examining key financial ratios such as profitability ratios (e.g.,
return on equity, profit margin), liquidity ratios (e.g., current ratio, quick ratio),
and solvency ratios (e.g., debt-to-equity ratio). These ratios help assess the

41
company's financial health and efficiency.

3. Industry Analysis: Understanding the industry in which a company operates is

essential in fundamental analysis. Factors such as industry growth rates,
competition, regulatory environment, and market trends can significantly impact a
company's prospects and long-term viability.

4. Management Evaluation: Fundamental analysis considers the competence and

track record of a company's management team. Evaluating their experience,
strategic decisions, and corporate governance practices helps gauge their ability to
drive the company's growth and profitability.

5. Valuation Assessment: Fundamental analysis aims to determine the intrinsic

value of a company's stock. This involves assessing various valuation methods,
such as price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and discounted
cash flow (DCF) analysis. By comparing the intrinsic value to the current market
price, investors can identify potential undervalued or overvalued stocks.

Remember, these are just brief points, and fundamental analysis encompasses a
wide range of factors and techniques. It's important to conduct thorough research
and analysis before making any investment decisions based on fundamental
analysis.

Meaning

Fundamental Technical
Analysis Analysis

Includes evaluating company’s stock to It is a statistical method used to find

find its intrinsisc value, and analyse pattern and predict future movements
factors that may affect the price in the based on past market data.
future.

42
Fundamental Methodology Technical

Analysis
Analysis

Examines Examines

Financial dat Price Movemen

Industry Trend Market Psychology

Competitors performanc

Economic Outlook

Fundamental Time Horizon Technical

Analysis Analysis

Long Term Short Term

Fundamental Function Technical

Analysis Analysis

Investing Trading

43
Trading & Investment strategies

Trading and investment strategies are approaches used by traders and investors to
make decisions about buying, selling, or holding financial assets such as stocks,
bonds, currencies, or commodities. These strategies can vary depending on the
individual's goals, risk tolerance, time horizon, and market conditions. Here are
some common trading and investment strategies.

Trading strategies

1. Momentum Trading: Momentum traders capitalise on the idea that assets that
have recently shown strong price momentum are likely to continue in the same
direction. They buy assets that have been trending up and sell assets that have been
trending down. This strategy relies heavily on technical analysis and short-term
price movements.

2. Swing Trading: Swing traders aim to capture short- to medium-term price

movements in the market. They typically hold positions for a few days to a few
weeks. Swing traders use technical analysis to identify potential entry and exit
points based on patterns, trends, and indicators.

3. Day Trading: Day traders buy and sell assets within the same trading day, seeking
to profit from short-term price fluctuations. They take advantage of intraday price
volatility and often use leverage and sophisticated trading strategies. Day trading
requires active monitoring of the market and quick decision-making.

4. News Trading: News trading involves taking advantage of significant market

moves triggered by news events or economic data releases. Traders react quickly to
news announcements, aiming to profit from the resulting volatility.

5. Event-Driven Trading: Event-driven trading focuses on specific events, such as

earnings reports, product launches, or mergers and acquisitions, that can
significantly impact the price of a stock. Traders anticipate and position themselves
ahead of these events.

6. Trend Trading: This strategy involves identifying and following trends in the
market, aiming to profit from sustained price movements in the same direction.

7. Mean Reversion Trading: Mean reversion trading is based on the concept that
prices tend to move back to their average or mean value after deviating from it.
Traders identify overbought or oversold conditions and enter positions expecting a

44
price reversal.

8. Scalping: Scalping is a short-term trading strategy where traders aim to make

small profits from frequent trades. Traders enter and exit positions quickly, often
within seconds or minutes, taking advantage of small price movements.

Investment Strategies

Growth Investing Value Investing

Income Investing

1. Growth Investing: Investors choose short-term or long-term investments based

on their belief in a company's growth potential and intrinsic value.

2. Value Investing: This strategy focuses on investing in undervalued companies

based on their intrinsic value, anticipating that the market will correct the price in
the future.

3. Income Investing: The focus is on generating cash income from stocks,

particularly through dividends and fixed interest income from bonds.

45
Portfolio Management

Portfolio management is defined as the act of managing an individual's

investments in order to maximise earnings over a certain time period.
Furthermore, such practices guarantee that individual capital is not overly exposed
to market risk.

Interesting Concept

According to the age-based asset allocation rule, you should allocate a percentage
of your portfolio to equities depending on your age. The rest should be allocated to
other secure assets. Here's a simplified breakdown:

Age Equity Allocation Allocation to fixed-income assets

20 80% 20%

30 70% 30%

40 60% 40%

50 50% 50%

60 40% 60%

70 30% 70%

80 20% 80%

This table demonstrates how the equity allocation decreases as age increases, while
the allocation to fixed-income assets increases accordingly. The strategy aims to
reflect a growth-oriented portfolio for younger individuals and a more conservative
retirement-focused portfolio for older individuals.

It is important to note that this rule of thumb provides a basic guideline and should
be adjusted based on individual factors such as risk profile, income, and future
goals. Other elements may need to be considered for a more tailored approach to
asset allocation.

46
 CHAPTER 6

Debt management is an art, Strive to become

a master.

What is a loan?

Many individuals want to buy a house, a flat, a car, or start a new business at some

point in their lives, but do not have the money to do so, and one method that helps

them overcome these problems is to obtain a loan.

A loan is a financial transaction in which one party, typically a financial institution

or lender, provides funds to another party, known as the borrower, with the

expectation that the borrower will repay the borrowed amount over time, usually

with interest. Loans are a common method of obtaining capital for various

purposes, such as purchasing a home, financing a car, funding education, or

starting a business.

What might you need to borrow money for in your

future?

Car House Business

47
 Types of loans

Loan

Unsecured Secured
Loan Loan

Short Term Loans against Loans against Loans against

Personal Loans against
Business Fixed Mutual funds Gold Loans Insurance Home Loan
Loan Property
Loan Deposits and Shares Policies

Loans are divided into secured loans and unsecured loans:

a) Secured Loans: Secured loans are those loans which require collateral, i.e.,
borrowers have to provide an asset to the lender as security for the borrowed funds.
If the borrower fails to repay the loan, the lender still has some means to get back
their money.

Secured loans typically have lower interest rates compared to unsecured loans.

1. Home Loans: Home loans are a secured mode of finance that provides the
funds to purchase or construct a residential property. The property acts as
collateral, and if the borrower defaults, the lender can seize and sell the
property to recover the loan amount.

2. Loans against Property: These loans allow borrowers to pledge their

residential, commercial or industrial property as collateral to obtain funds. The
loan amount disbursed is equivalent to a certain percentage of the property’s
value.

3. Loans against Insurance Policies: Borrowers can use their life insurance
policies as collateral to secure a loan. The loan amount is usually a percentage
ofthe policy's surrender value. 

4. Gold Loans: Gold loans are secured by pledging gold jewellery or coins as

48
 collateral. The value of the loan is determined based on the quality and quantity
of the gold. 

5. Loans against Mutual Funds and Shares: In this type of loan, borrowers
pledge their mutual funds or shares as collateral to obtain funds. The loan
amount is typically a percentage of the value of the pledged assets.  

6. Loans against Fixed Deposits: This type of loan allows borrowers to obtain
funds by pledging their fixed deposits with banks. The loan amount is usually a
percentage of the fixed deposit value. 

b) Unsecured Loans: Unsecured loans are those loans which do not require
collateral. Lenders provide the money based on factors such as the borrower's
credit score, history, and past associations. Thus, a borrower needs to have a
positive credit history. 

Unsecured loans generally have higher interest rates due to the lack of collateral.

1. Personal Loans: Personal loans are unsecured loans that individuals can use
for various purposes, such as debt consolidation, travel, or medical expenses.
These loans are granted based on the borrower's creditworthiness. 

2. Short-term Business Loans: These loans provide quick financing for

businesses to cover short-term expenses or capitalised on immediate
opportunities. They do not require collateral but may have higher interest rates.

Loan Providers
Micro Finance
Companies BANKS

Unsecured
Loan

Regulated
Entities

Secured
Loan

Housing Finance NBFC

49
 Other unregistered Chit Funds
entities mainly providing
cash loans

Unregulated
Entities

Peer to Peer lending Pawn Brokers

platforms

Responsible Borrowing 

Responsible borrowing means borrowing money only when you need it, and only
borrowing an amount you can afford to pay back. It also means making timely
payments on your debts and avoiding taking on too much debt.

To Fund Higher To Invest in

Education property

Credit card to
Lifestyle purchase
Expenditure Luxury Items

50
For example, let's say you want to buy a new laptop, but you don't have the money
to pay for it outright. You decide to take out a personal loan from a bank to finance
the purchase. Before you do so, make sure to check the interest rate and repayment
terms and ensure that the monthly payments fit within your budget. Once you have
the loan, you make all your payments on time and pay off the loan in full within the
agreed-upon timeframe. This demonstrates responsible borrowing because you
only borrow what you needed and could afford to pay back, and you made sure to
pay off the debt as quickly as possible without taking on additional debt.

Credit Score

A credit score is a three-digit number

that represents your creditworthiness,
or how likely you are to pay back money 300 - 850
that you borrow. It's calculated based
on your credit history, which includes
things like your payment history,
outstanding debts, and the length of
your credit history. Lenders use your
credit score to determine if you qualify Very Bad Excellent
for loans and credit cards and to set the
interest rate and other terms. The
Credit Score
higher your credit score, the better your
chances of getting approved for loans
and credit cards with good terms and
lower interest rates.

Did You Know?

Credit invisibles are people who don’t have any information on file with credit
bureaus. When a credit check is run, and there is no loan been taken by the
assesses they may be invisible or unscorable.

51
 True or False

Borrowed money is free money! T / F

You have to pay interest on money

you borrow from a Bank.
T / F

The later you pay back the money you

owe, the lower your credit score will be.
T / F

Are you ready to

Debt doesn’t cost you anything T / F borrow wisely?

The faster you pay back the money you

borrowed, the lower the amount of T / F
interest you will pay.

A Prominent government scheme for seeking loans

Pradhan Mantri Mudra Yojana (PMMY)

Mr. Pradhan Mantri MUDRA Yojana (PMMY) is a plan introduced by the Hon'ble
Prime Minister on April 8, 2015, to provide non-corporate, non-farm small/micro
entrepreneurs with loans of up to 10 lakh. Under PMMY, these loans are categorised
as MUDRA loans. Commercial banks, RRBs, Small Finance Banks, Cooperative
Banks, MFIs, and NBFCs make these loans.

Borrowers can visit any of the above-mentioned lending institutions or apply

online using the Umang platform. Under the umbrella of PMMY, MUDRA has

52
developed three products, namely 'Shishu,' 'Kishore,' and 'Tarun,' to represent the
stage of growth / development and financial requirements of the beneficiary micro
unit / entrepreneur, as well as to serve as a reference point for the next step of
graduation / growth.

Shishu Kishore Tarun

Covering Loans upto Covering Loans above Covering Loans above

₹50,000/- ₹50,000/- and upto

₹5 Lakhs/- and upto

₹5 Lakhs ₹10 Lakhs

You are debt Savvy!

It is essential to recognise that debt carries inherent risks and should be managed
with utmost care. By adopting a proactive and disciplined approach to debt
management, individuals can safeguard their financial stability and future well-
being.

Through prudent budgeting, effective repayment strategies, and regular

monitoring of one's financial situation, it becomes possible to navigate the
challenges of debt and pave the way for a more secure and prosperous financial
future. Remember, by managing debt carefully, one can regain control over their
finances and work towards achieving their long-term financial goals.

Now you are ready to

manage your debt wisely!

53
 CHAPTER 7

Opt for Safety : Insurance

I nsurance is a way to protect yourself from financial losses. When you invest in
insurance, you acquire a form of safeguard against unforeseen financial setbacks.
In the event of an adverse occurrence, the insurance company provides
compensation to either you or a designated beneficiary of your choice.

Having the right insurance can make a big difference in your life. If you don't have
insurance and you meet with an uncertain situation, you could be left with a huge
financial burden. For example, if you get into a car accident and don't have car
insurance, you could be responsible for paying for the other driver's car, your own
car, and any medical expenses. This could easily cost lakhs of rupees.

Insurance can also help you pay for routine expenses, such as annual doctor's visits
and dental checkups. Insurance companies often negotiate discounts with
healthcare providers, so their customers can pay lower rates.

Insurance is a contract between an individual

or entity (the insured) and an insurance
company (the insurer) whereby the insurer
promises to pay a designated beneficiary a
sum of money (the benefit) in the event of the
insured's death, injury, or other defined event
(the insured event). In exchange for this
promise, the insured pays a premium to the
insurer.

exchange for this promise, the insured pays a premium to the insurer.

The policyholder is not always the same person as the insured. For example, a
company might buy life insurance for its employees. In this case, the employees are
the insured, and the company is the policyholder.

54
 The Insurance Regulatory and Development Authority of India (IRDAI) is the
regulatory body overseeing the insurance sector in India. Established under
the Insurance Regulatory and Development Authority Act, 1999, its mission is
to promote orderly growth while protecting the interests of insurance
policyholders. 

Types of insurance :

Life Insurance - Life insurance is a type of insurance

that offers financial protection to beneficiaries upon
the death of the insured person. It is designed to
provide support to loved ones, cover expenses, and
ensure financial security in the event of the
policyholder's death.

General Insurance - General insurance is a category

of insurance that provides coverage for various risks
and losses, excluding life-related events. Unlike life
insurance, general insurance covers assets,
properties, liabilities, and other non-life risks.

Here are some of the most common types of general insurance:

Health insurance: Health insurance is a type of insurance that helps pay for
medical expenses when you get sick or injured. You pay a monthly fee called a
premium, and in exchange, the insurance company helps cover the cost of your
healthcare, including doctor visits, prescriptions, and hospital stays.

Vehicle/Motor insurance: Vehicle insurance is a type of insurance policy that

provides financial protection for your vehicle in the event of an accident, theft, or
damage. You pay a premium to an insurance company, and in return, they will
cover the cost of damages to your vehicle or to third-party property, as well as
medical expenses for yourself or others involved in the accident. The specific
coverage and cost of your policy will depend on various factors such as the type of
vehicle you own, your driving record, and the level of coverage you choose. Having
vehicle insurance is typically mandatory in most countries to protect yourself and

55
others on the road. 

The coverage for vehicle insurance is of two types:

Third-Party (TP) liability insurance that covers the cost of damage or injury to
third parties, which includes other people, vehicles, or property involved in an
accident caused by the insured vehicle. It does not cover damage to the insured
vehicle or its occupants. TP insurance is mandatory in most countries.

Own Damage (OD) insurance that covers the cost of damage to the insured
vehicle or loss of the vehicle due to theft, fire, or natural calamities. OD
insurance is optional but highly recommended as it provides comprehensive
coverage for the insured vehicle.

Property insurance: Property insurance is a type of insurance that helps protect you
financially in case your property, such as your home or business, is damaged,
destroyed, or stolen. You pay a premium to an insurance company, and in return,
they agree to provide compensation or repair/replacement costs for any covered
losses or damages. The coverage may include damage caused by natural disasters,
fire, theft, or other unforeseen events that may cause damage to your property.
Property insurance is important to protect your assets and give you peace of mind
in case of unexpected events. 

Need for Insurance

Financial Protection Risk Management

Insurance provides a safety net against Insurance allows individuals and

unexpected events that can result in businesses to transfer the risks they face
financial losses. It helps individuals and to an insurance company. By paying
businesses manage risks by offering premiums, policyholders shift the
compensation or reimbursement for financial burden of potential losses to
covered losses, such as property the insurer, reducing their own exposure
damage, medical expenses, or liability to risk.
claims.

56
 Legal and Contractual
Peace of Mind
Requirements

Insurance may be required by law or as Insurance offers peace of mind by

part of contractual agreements. For providing a sense of security and
example, motor insurance is typically protection against unforeseen events.
mandatory to legally operate a vehicle. Knowing that you have insurance
Similarly, businesses may need coverage in place can alleviate anxiety
insurance coverage to comply with and worry about potential financial
regulatory requirements, secure loans, hardships, allowing you to focus on other
or fulfill contractual obligations with aspects of life or business operations.
clients or partners.

Choosing the best option

Choosing the best insurance option depends on several factors, including your
specific needs, financial situation, and risk profile. Here are some steps to help you
select the most suitable insurance option
Assess Your Needs: Start by identifying the specific risks you want to protect
against. For example, if you're looking for health insurance, consider factors
like your health condition, preferred healthcare providers, and coverage
requirements for you and your family. If it's motor insurance, evaluate your
driving habits, the value of your vehicle, and your desired level of coverage
Research and Compare: Gather information about different insurance providers
and their policies. Compare coverage options, premiums, deductibles, policy
terms, and additional features or benefits. Look for reputable insurance
companies with a track record of good customer service and reliable claim
settlement
Evaluate Coverage and Limits: Carefully review the coverage details and policy
limits of each insurance option. Ensure that the coverage aligns with your
specific needs and provides sufficient protection. For example, with health
insurance, consider the scope of medical services covered, network providers,
and exclusions. In property insurance, assess the coverage for various perils and
the replacement value of your assets
Consider Your Budget: Determine how much you can afford to spend on
insurance premiums. Evaluate the premium amount and ensure it fits within
your budget without compromising other financial obligations. Remember that

57
 lower premiums may come with higher deductibles or limited coverage, so find
a balance between affordability and adequate protection
Seek Expert Advice: If needed, consult with an insurance professional or broker
who can provide guidance based on your specific circumstances. They can help
you understand the options, compare policies, and select the most appropriate
insurance coverage
Read the Policy Carefully: Before making a decision, thoroughly read the
insurance policy documents, including the terms and conditions. Pay attention
to any exclusions, limitations, or waiting periods. Understand the claims
process, the renewal terms, and any penalties or additional fees involved
Customer Reviews and Reputation: Research customer reviews and feedback
about the insurance provider. Look for positive experiences, prompt claim
settlements, and good customer service. A reputable and reliable insurer with a
strong financial standing is crucial to ensure a smooth insurance experience
Seek Recommendations: Ask for recommendations from friends, family, or
colleagues who have had positive experiences with specific insurance providers.
They may provide valuable insights and suggestions based on their firsthand
experiences.

Remember, the "best" insurance option may vary depending on individual

circumstances and preferences. It's important to carefully evaluate your needs,
consider your budget, and conduct thorough research to make an informed decision
that aligns with your specific requirements.

Insurance claims 

An insurance claim is a formal request made by a

policyholder to their insurance company, seeking
compensation for covered losses or damages. It
provides financial support to the policyholder during
unforeseen circumstances. The insurance claim
adjuster plays a crucial role in assessing the claim
and determining a fair settlement offer.

58
Insurance Claim Process

Here are the steps involved in filing an insurance claim

Reporting the Claim: The policyholder informs the insurance company about
the claim, either through online channels or by contacting their designated
claims department. The insurer assigns a claim adjuster to guide the
policyholder through the process

Claim Investigation: The insurance claim adjuster investigates the claim by

gathering relevant information and evidence. This may include reviewing
documents, conducting interviews, inspecting the damage, or assessing the
circumstances surrounding the loss

Coverage Evaluation: The adjuster reviews the insurance policy to determine the
extent of coverage for the claimed loss. They assess whether the loss falls within
the policy's terms and conditions, including any deductibles or exclusions

Service and Repair: If the claim is approved, the insurer initiates the necessary
steps to provide services or repairs to the policyholder. This could involve
arranging repairs, coordinating with service providers, or providing financial
compensation

Claim Settlement: Once the investigation is complete and the coverage is

determined, the insurance company makes a settlement offer. This offer may
cover the cost of repairs, replacement, or reimbursement for the claimed loss.
The policyholder can accept the settlement or negotiate further if needed.

Example:

Let's consider the example of Seema, the insured, who experiences a major heart
attack. Her husband Deepak admitted her to the ICU of a nearby hospital. Deepak
proceeds to file a health claim with XYZ Insurance Co., an insurance company, on
Seema's behalf. He requests indemnification of ₹5,00,000 (₹4,25,000 for ICU
expenses and ₹75,000 for medications).

Seema has a health insurance policy with XYZ Insurance Co. that has a ₹10,000
deductible. This means that Seema has to pay the first ₹10,000 of her medical
expenses before the insurance company will pay anything.

The insurance claim adjuster verifies the claim with the necessary documentation,
including Seema's hospital bill and prescription drug receipts. The adjuster also

59
 confirms that Seema has a valid health
insurance policy with XYZ Insurance Co.

After the insurance claim adjuster

approves the claim, XYZ Insurance Co.
disburses a cheque for ₹4,25,000 to Seema.
This is the amount of money that Seema is
entitled to after the deductible is applied.

The insurance company processed the

claim within 10 business days. This is
considered to be a quick turnaround time
for an insurance claim.

Overall, Seema had a positive experience

filing an insurance claim with XYZ
Insurance Co. The process was smooth and
efficient, and she received the money she
was entitled to in a timely manner.

In India, a major factor preventing individuals from purchasing and taking use of
the coverage provided by insurance plans is insurance fraud. Let's examine the
main reasons for insurance fraud so that you are aware of them. 

Making misleading claims - This might involve submitting fraudulent,

exaggerated claims, creating fake medical records, submitting several claims for
the same occurrence, and so forth. Incorrect information provided by applicants
about their age, employment, health, and other factors is another possibility.

Policyholder fraud - In some situations, the policyholder willfully conceals certain

facts and information about their way of life, place of employment, or health in
order to pay lesser premiums.

Identity Theft - This kind of fraud happens when someone assumes another
person's identity to get insurance coverage or greater advantages from the
insurance provider.

60
Fraudulent claimant - In this type of fraud, the applicant or policyholder makes a
claim for something that never really happened, such an injury, accident, etc.

Insurance fraud is an offence that is punished by law, and those responsible might
face harsh punishment. So, it is preferable to protect yourself against such things.
Additionally, it's crucial to understand and be aware of the various frauds that are
happening in the insurance industry so that you can avoid being a victim of such
dishonest actions.

Schemes of Government

Pradhan Mantri Jeevan Jyoti Bima Yojana(PMJJBY) -

People between the ages of 18 and 50 who have bank
accounts and permission to enrol or allow auto-debit
are eligible to participate in the PMJJBY. The primary
KYC for the bank account would be Aadhar. The 2-lakh-rupee life insurance policy is
renewable and is valid for a 12-month period starting on 1 June and ending on 31 May.
In the event of the insured person's death for whatever cause, this policy provides
risk coverage up to Rs. 2 Lakh. The yearly premium is Rs. 436, and it must be auto-
debited from the subscriber's bank account on or before May 31st of each annual
coverage term, based on which policy he chooses. 

Life Insurance Corporation and all other life insurers that are prepared to provide
the product on similar terms with the required approvals and partner with banks
for this purpose are providing the scheme.

Pradhan Mantri Suraksha Bima Yojana(PMSBY) -

The Scheme is open to anyone between the ages of
18 and 70 who have a bank account and who
consent to join or activate auto-debit on or before
May 31 for the coverage period running from June 1
to May 31 on an annual renewal basis. The primary
KYC for the bank account would be Aadhar. For
accidental death and total disability, the risk
coverage under the plan is Rs. 2 lakh, and for
partial disability, it is Rs. 1 lakh.
The account holder's bank account will be debited in one payment for the annual
premium of Rs. 20 using the "auto-debit" feature. The plan is being provided by
Public Sector General Insurance Companies or any other General Insurance
Company that is prepared to offer the product on similar terms with the required
approvals and tie-up with banks for this purpose.

61
Life Cover under Pradhan Mantri Jan Dhan
Yojana (PMJDY) - The Pradhan Mantri Jan Dhan
Yojana (PMJDY) is an initiative that aims to give
every household that hasn't had an advantage
until now of a basic bank account. A RuPay debit
card with a Rs. 1 lakh accidental insurance cover is
included with the bank account. In addition to the
Rs. 1 lakh accident insurance cover, the Hon'ble
Prime Minister announced a Rs. 30,000 life
insurance cover for people signing up for a bank
account with a RuPay debit card before January 26,
2015, at the introduction on August 28 in New Delhi. The Pradhan Mantri Jan Dhan
Yojana provides the relatives of deceased individuals with life insurance coverage at
a cost of Rs. 30,000/- in the event of the life assured's death for any cause. The
programme intends to offer protection to families from economically
underprivileged groups who cannot afford to buy such insurance directly. The
Government of India pays the premium subscription for the life insurance provided
by PMJDY.

Varishtha Pension Bima Yojana (VPBY) -

Varishtha Pension BimaYojana, a pension
programme for seniors, was established by
the Government a total of 3.16 lakh
annuitants would profit from the programme,
VPBY
and the entire corpus is worth Rs. 6,095 crore.
The Hon. Finance Minister recommended in his Budget Speech for the year 2014–15
to relaunch the programme for a brief time from August 15, 2014, to August 14,
2015, for the benefit of citizens 60 years of age and older. As a result, on August 14,
2014, the Finance Minister officially announced the resurrected Varishtha Pension
BimaYojana (VPBY), which was then made available for enrollment between August
15, 2014, and August 14, 2015. 

In accordance with the Scheme, subscribers who pay a lump sum get a monthly
pension at a fixed rate of 9% each year. The Government of India makes up any
difference between the stated return and the return earned by the LIC on the funds
through a subsidy payment in the programme. After fifteen years from the date the
insurance was purchased, the plan permits withdrawals of the deposit amount by
the annuitant.

Pradhan Mantri Fasal Bima Yojana(PMFBY) - The Pradhan Mantri Fasal Bima Yojna
was introduced by Prime Minister Shri Narendra Modi on February 18, 2016. In Rabi
2016–17, 23 states and 2 UTs implemented the programme, compared to 21 states in

62
 Kharif 2016. According to data as of 31.03.2017,
almost 3.7 crore farmers had their 3.7 crore ha of
land insured during the Kharif 2016 season for a
premium of Rs 16212 crore, for an insured amount
of Rs 128568.94 crore. 

The farmers' income is stabilised thanks to

PMFBY's comprehensive insurance coverage
against crop failure. The General Crop Estimation
Survey (GCES) includes all food and oilseed crops
as well as annual commercial and horticultural
crops for which previous yield data is available and
for which the necessary number of crop cutting
experiments (CCEs) are done. Empanelled general
insurance firms carry out the plan. The relevant
State Government conducts a bid process to choose
the Implementing Agency (IA). For loanee farmers who are using a Crop Loan or
KCC account to grow certain crops, the programme is required; for everyone else, it
is optional. The Ministry of Agriculture is in charge of running the programme.

Pradhan Mantri Vaya Vandana Yojana (PMVVY) -

Based on the success and popularity of the
Varishtha Pension Bima Yojana 2003 (VPBY-2003)

PMVVY
and Varishtha Pension Bima Yojana 2014
(VPBY-2014) schemes, as well as to protect elderly
people 60 years of age and older against a future
decline in their interest income due to the uncertain
market conditions and to provide social security
during old age, it was decided to introduce a
simplified scheme of assured pension of 8% known
as the "Pradhan Mantri Vaya Vandana Yojana"
Through the Indian Life Insurance Corporation
(LIC), it is being put into practise. According to the plan, subscribers will receive an
assured pension based on a guaranteed rate of return of 8% per year, payable
monthly, upon payment of an initial lump sum amount ranging from a minimum
purchase price of Rs. 1, 50,000 for a minimum pension of Rs. 1000 per month to a
maximum purchase price of Rs. 7, 50,000 for a maximum pension of Rs. 5,000 per
month.

63
 CHAPTER 8

Retirement Planning: Secure your golden years

financially

Retirement Planning and Pension Security 

Building a secure future is crucial, and retirement

planning and pension security play a significant role

in achieving financial stability during one's

retirement years. Retirement planning and pension

security are vital components for building a secure

future. Retirement planning involves setting

financial goals, saving and investing wisely, and

regularly reviewing and adjusting the retirement

plan. It ensures a comfortable retirement by

providing financial independence, adapting to longer

life expectancies, bridging the gap between income

sources, combating inflation, maintaining the desired

lifestyle, and offering flexibility in retirement

decisions.

Activity

Try making a list of things you want to do after you retire.

64
Instructions:

1. Reflect on your retirement goals and aspirations. Consider the activities and
experiences that would bring you joy and fulfillment during your retirement years.

3. Begin by making a list of things you want to do after you retire. Think about the
areas of life that are important to you, such as personal interests, health and
wellness, relationships, and personal growth.

4. Here are some planning-related ideas to consider for your retirement bucket list

Evaluate your financial situation and create a budget for retirement

Develop a healthcare plan and consider factors such as health insurance, long-
term care insurance, and potential medical expenses in retirement.

5. Once you've brainstormed your retirement planning ideas, prioritise them based
on importance and feasibility. This will help you focus on the most essential
aspects of your retirement plan.

6. Keep your retirement bucket list in a safe place and revisit it regularly to stay
motivated and track your progress. Remember that retirement planning is an
ongoing process, and your goals and aspirations may evolve over time.

Here's an overview of retirement planning and the importance of pension security:

Retirement Planning

Retirement planning involves setting financial goals, making savings and

investment decisions, and creating a strategy to ensure a comfortable and
financially stable retirement. It typically includes the following elements:

a. Goal Setting: Determining the desired retirement lifestyle, estimating the

expenses, and setting financial goals for retirement.

b. Savings and Investments: Regularly saving and investing money in retirement

accounts, like the National Pension System (NPS), allows funds to grow over time
through compounding interest.

c. Asset Allocation: Allocating investments across different asset classes (e.g.,

stocks, bonds, real estate) based on risk tolerance, time horizon, and financial
objectives.

d. Regular Review: Monitoring and adjusting the retirement plan periodically to

ensure it stays on track with changing financial circumstances, goals, and market
conditions.

65
Pension Security

Pension security refers to the assurance of a stable income stream during

retirement, often provided through employer-sponsored pension plans. Here are
key aspects of pension security:

a. Defined Benefit Plans: Some employers offer defined benefit plans, providing
retirees with a fixed pension based on years of service and average earnings for a
stable income stream.

b. Social Security: Government: administered social security programs provide

income for retirees based on their work history and contributions made during
their careers.

c. Pension Fund Management: Pension funds are managed by professional fund

managers who invest contributions to generate returns and ensure the availability
of funds for future pension payments.

d. Pension Regulation: Government regulations and oversight protect and monitor

pension funds to ensure their solvency and safeguard retirees' interests.

How much money do you need to retire?

To approximate the funds required for retirement, various factors such as

desired lifestyle, expected retirement income, and inflation need to be
considered. An estimation can be made using the following formula:

Retirement corpus = (annual expenses X number of years in retirement) / (1 +

inflation rate)^(number of years until retirement)

This calculation provides a rough estimate of the retirement corpus needed to

sustain the desired lifestyle throughout the retirement period.

Here’s the calculation

For example, if you expect to spend INR 10,00,000 annually in retirement and
you plan to retire in 20 years, with an inflation rate of 6%, you will need a
retirement corpus of INR 2.5 crore.

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How to plan for retirement?

Retirement planning is an important part of financial planning, Here are some tips
on how to plan for your retirement:

1. Set financial goals: To plan for retirement, start by setting clear financial goals
that align with your desired lifestyle, Common goals include
Replace 70-80% of your pre-retirement income
Maintain your current lifestyle
Travel and pursue hobbies
Leave an inheritance for your heirs.

This assessment will help you determine how much money you need to save and
invest for a secure retirement.

2. Create a budget: A budget can help you track your spending and ensure sufficient
monthly savings. There are many different budgeting methods, so find one that
works for you and stick to it.

3. Start saving early: The earlier you start saving for retirement, the more time your
money has to grow. Even if you can only save a small amount each month, it will
add up over time.

4. Invest your savings wisely: When you invest your savings, you are putting your
money to work for you. Over time, your investments can grow and help you reach
your retirement goals

5. Get professional help: Seeking guidance from a financial advisor can provide
valuable assistance in creating a tailored retirement plan that addresses your
specific needs and challenges.

6. Review your plan regularly: Regularly review and adjust your retirement plan as
your needs change over time. This will help you ensure that you are on track to
reach your retirement goals..

Pension Fund Regulatory and Development Authority (PFRDA)

The PFRDA is the regulatory body in India that oversees and regulates the pension
sector. Here are the key roles and responsibilities of PFRDA
Regulation and Development: PFRDA's primary role is to regulate and develop
the pension industry in India. It formulates and enforces regulations,
guidelines, and operational frameworks for pension schemes to ensure
transparency, fairness, and investor protection.

67
 Registration and Supervision: PFRDA registers, supervises and monitors various
entities involved in the pension sector, including Pension Fund Managers
(PFMs), Custodians, and Central Record keeping Agencies (CRAs).
Investor Education and Awareness: PFRDA promotes education and awareness
about retirement planning and pension-related matters through various
campaigns, seminars, and workshops
Grievance Redressal: PFRDA facilitates the resolution of grievances and
complaints related to pension schemes. It ensures that appropriate mechanisms
are in place to address and resolve investor grievances efficiently and
effectively
Market Development: PFRDA works towards the development and expansion of
the pension market in India. It aims to increase the coverage of pension
schemes, enhance product offerings, and encourage the participation of
individuals, employers, financial institutions etc
Intermediary Regulation: PFRDA regulates intermediaries involved in the
pension sector, such as Point of Presence entities and Aggregators and also sets
standards and guidelines for their operations
Policy Advocacy: PFRDA actively engages with the government, regulators, and
other stakeholders to advocate for pension-related policy reforms. It provides
recommendations and inputs to improve the pension ecosystem and promote
pension coverage and security for all.

Government Initiative: National Pension Scheme

The National Pension Scheme (NPS) is a voluntary and contributory pension

scheme launched by the Government of India. It is designed to provide retirement
income to individuals in the organised and unorganised sectors. 

Under the NPS, individuals can contribute regularly towards their pension account
during their working years. The accumulated savings are then invested in a mix of
equity, government securities, and other instruments to generate returns. Upon
retirement, individuals can withdraw a portion of the accumulated corpus as a lump
sum and use the remaining amount to purchase an annuity, which provides a
regular pension for the rest of their life. 

The National Pension System (NPS) is being administered and regulated by Pension
Fund Regulatory and Development Authority (PFRDA) set up under PFRDA Act,
2013.

68
NPS is a defined contribution product that is linked to the market. Each individual
subscriber is assigned a unique Permanent Retirement Account Number (PRAN),
which is maintained by the Central Recordkeeping Agency (CRA).

There are two types of NPS accounts: Tier-I and Tier-II.

Tier-I account - Tier-I is a pension account with limited withdrawal options
Tier-II account - Tier-II is a voluntary account that offers more flexibility in
terms of investments and withdrawals. 

To open a Tier-II account, an individual must have an active Tier-I account. The
contributions made by subscribers to NPS accumulate over time, and the corpus
grows with market-linked returns until retirement.

Upon exit, retirement, or superannuation from the National Pension System (NPS),
a minimum of 40% of the accumulated corpus is required to be used for purchasing
an annuity from a life insurance company. This annuity ensures a pension for life.
The remaining balance of the corpus is then paid out as a lump sum.

The NPS platform provides various models to cater to different user

segments, including

The Government Model for Central and State Government Employees:

NPS is mandatory for Central Government employees (excluding Armed Forces)

recruited on or after January 1, 2004.

Most State Governments, except West Bengal, have also adopted NPS for their
employees.

Government employees contribute 10% of their salary, and the government

provides a matching contribution.

For Central Government employees, the employer's contribution rate was

increased to 14% from April 1, 2019

The Corporate Model:

Companies have the option to adopt NPS for their employees.

The contribution rates under this model are determined based on the employment
conditions set by the respective companies.

69
 The All Citizens Model:

The All Citizens Model allows all Indian citizens between the ages of 18 and 65 to
voluntarily join NPS.

Individuals who fall within this age range can choose to participate in NPS on a
voluntary basis.

How to join NPS:

Enrolments and contributions for the National Pension System (NPS) can be made
through different channels based on the individual's category: nodal officers for
government employees, employers or PoPs for corporate employees, and PoPs or
the eNPS platform for other individuals.

70
 CHAPTER 9

Risk Management: The art of sailing through

the financial sea

R isk management is an essential aspect for anyone's financial journey. It

involves identifying, assessing, and mitigating potential risks that could impact
the achievement of objectives or lead to financial losses. Risk management
encompasses various strategies, including diversification, insurance, hedging,
emergency fund and contingency planning.

Risk management is an essential aspect for anyone's financial journey. It involves

identifying, assessing, and mitigating potential risks that could impact the
achievement of objectives or lead to financial losses. Risk management
encompasses various strategies, including diversification, insurance, hedging,
emergency fund and contingency planning.

Have you thought about the possible

things that could go wrong in your life?
Are there any risks that you face? If
there are, do you have any protection in
place? If you do, how have you taken
steps to keep yourself safe? If not, is
there a way for you to protect yourself?

Risk management is a crucial process in the world of finance that helps investors
identify, analyse, and minimise uncertainties when making investment
decisions. It involves understanding and managing potential losses that may
arise. Every investment carries some level of risk, which is closely linked to the
potential returns.

To assess risk, investors often look at various factors. One common approach is to
analyse the historical fluctuations in investment returns, also known as volatility.
Risk management applies to various financial activities; for instance, investors
may

71
choose to invest in government bonds or fixed deposits offered by banks, which
are generally considered safer options compared to investing in riskier corporate
bonds or stocks.

Managing Financial Risk

Risk management approaches can be categorised into following

The first approach involves completely avoiding risk by selecting low-risk
assets.
The second approach is about accepting and retaining the risks that come with
investment activities.
The third approach entails sharing risks among multiple parties, such as
reinsurers providing coverage for risks that insurance companies cannot
handle alone.
The fourth approach involves transferring risks to another party, as seen in
health insurance where the coverage risk is passed on to the insurer
Lastly, instead of eliminating risk entirely, the fifth approach focuses on
minimising losses by preventing their spread to different asset classes, often
achieved through diversification.

Following are the strategies of managing ris

Diversification

Get Savvy at
savings
Diversification is the practice of spreading your investments across different
asset classes that helps to reduce your risk by limiting your exposure to any one
asset class.

Diversification is a manifestation of the old saying "Don't put all your eggs in one
basket." That is, you should not rely on a single form of investment to reach your
financial objectives. Long-term investments, such as stocks, bonds, and real
estate, are packed with uncertainties.

Each of these investment categories is referred to as an asset class, and each

entails a distinct amount of uncertainty or risk. Each reacts differently to
different events or market situations. For these reasons, it is prudent to diversify,
or invest in a wide range of assets or asset classes.

A well-diversified asset portfolio will lower your risk over time. Assume you have
a proportion of your money invested in stocks, bonds, and real estate. When one

72
asset class falls in value, you may fairly expect the others to compensate and rise in
value. Different asset types outperform during different economic cycles.

Stocks

25%

Bonds
Gold

25% 25%

Cash

25%

Here’s an example of portfolio diversification:

Diversified portfolio could consist of allocating 25% each of investments to

different asset classes: stocks, bonds, gold, and cash.

For the stock portion, an investor may choose to invest in a mix of large-cap, mid-
cap, and small-cap stocks across various sectors. This diversification within the
stock market helps spread the risk associated with individual companies or
industries.

For the bond component, an investor may consider investing in government bonds
or high-quality corporate bonds. These bonds provide a fixed income stream and
relatively lower risk compared to stocks.

Gold is often considered a safe haven asset, and allocating a portion of the portfolio
to it can act as a hedge against market volatility. One can invest in physical gold or
gold exchange-traded funds (ETFs) to gain exposure to this asset class.

Lastly, keeping a portion of the portfolio in cash or cash equivalents provides

liquidity and flexibility to take advantage of investment opportunities that may

73
arise.

By diversifying investments across these asset classes, the investor reduces the
risk associated with being heavily reliant on a single asset class. Different asset
classes have varying levels of risk and tend to perform differently under different
market conditions. This diversification strategy helps balance the overall risk and
potential returns of the portfolio, aiming for more stable long-term growth

Insurance

As discussed earlier in the insurance chapter why insurance is necessary.

Insurance is essential for risk management as it provides protection and financial

security in the face of unexpected events. It acts as a safety net against potential
risks that could lead to significant financial loss. Whether it's insuring your
home, car, health, or life, insurance allows individuals and businesses to transfer
the burden of potential losses to an insurance provider. In exchange for paying
premiums, policyholders gain the assurance that they will be financially
supported in case of accidents, damage, illness, or even death. Insurance helps
individuals and businesses mitigate the impact of unforeseen circumstances,
allowing them to focus on recovery and rebuilding without incurring crippling
expenses. It promotes peace of mind, stability, and resilience, making it an
indispensable tool for effective risk management.

Sushant's decision to obtain health insurance proved

invaluable when he unexpectedly fell severely ill. The
insurance coverage significantly alleviated the financial
burden associated with his extensive medical treatment,
ensuring he could receive the necessary care without
added stress. Without insurance, Sushant would have faced
overwhelming costs that could have potentially jeopardised
his recovery. The timely support provided by his insurance
policy allowed him to focus solely on his health and well-
being. This serves as a compelling reminder of the crucial
role insurance plays in safeguarding individuals during
emergencies, providing them with the necessary financial
protection and peace of mind.

74
 Hedging

Hedging is an investment strategy that helps reduce financial risk by holding

assets that move in the opposite direction of your main investment. This way, if
your main investment decreases in value, the hedge investment can offset or
limit the overall loss. Hedging offers the advantage of effectively managing and
controlling investment risk and exposure. Hedging uses derivatives like options
which serve as a valuable tool for protecting oneself in case expectations are not
met.

The primary benefit of hedging is the ability to set limits on potential losses to a
comfortable level. While the cost of implementing a hedge may restrict potential
gains, it provides assurance that losses will not escalate significantly in the event
of a price decline. Both companies and individuals can utilise derivatives to
eliminate uncertainties related to future commodity prices. Through the use of
futures contracts, they can secure predetermined prices for essential goods well
ahead of the actual delivery date. Hedging isn't free, it incurs costs that diminish
the overall potential rewards.

Here’s a real life example of hedging:

A common example of hedging involves a potato farmer. The farmer sows his
seed potatoes during the planting season and plans to sell his harvest at a later
date. However, during the growing period, the farmer faces the risk of potato
prices decreasing by the time of the sale. While the farmer aims to maximise his
profits from the harvest, he does not want to take speculative risks on the prices.
To mitigate this risk, the farmer chose to bind a contract with the potato chips
manufacturing company , allowing the farmer to lock in the current price for a
specific future date. By doing so, the farmer protects himself against potential
price declines, ensuring a more secure income from his potato.

75
 Emergency fund

An emergency fund is a sum of money set aside for financial emergencies. It

serves as a safety net to provide security during unexpected situations, like
medical emergencies or significant home repairs. The primary purpose of an
emergency fund is to improve financial stability by offering a readily accessible
source of funds. Typically, emergency funds consist of cash or easily convertible
assets, which eliminates the need to rely on high-interest debts like credit cards
or loans. Additionally, it helps prevent jeopardising long-term financial security
by avoiding the need to dip into retirement savings.

How much emergency fund one needs?

The amount to be saved as an emergency fund varies

based on individual circumstances and income levels.
What may be considered appropriate for one person
may not be suitable for another. For individuals with
stable jobs, a good rule of thumb is to have three to six
months' worth of living expenses saved. However, those
with lower job security are recommended to aim for
6-12 months' worth of expense. The size of the

emergency fund is influenced by factors such as the stability of income and the
number of earning members in the family. Having multiple earners in the family can
make it easier to accumulate a larger emergency fund compared to relying solely on a
single person's efforts.

Contingency planning

A contingency plan is often known as a "Plan B" or backup plan since it serves as
an alternative course of action when anticipated outcomes do not occur as
planned.

Contingency planning is the process of developing a plan for how to deal with
unexpected events. Your contingency plan should include a list of potential
emergencies, as well as steps you can take to prepare for and deal with each one.
For example, if you live in an area that is prone to natural disasters, you might
want to have a plan for how to evacuate your home and where you will stay if you
are displaced. You should also have a plan for how you will pay for unexpected
expenses.

76
 Do you have a plan B?

Plan B
Example of a contingency plan : Let's say an individual is
planning to start a small business. As part of their
contingency plan, they anticipate the possibility of not
generating enough revenue in the initial months. To Plan A
mitigate this risk, they set aside a sufficient amount of
savings as a buffer to cover their living expenses and
business costs during the early stages. They also
explore alternative income sources, such as
freelancing or part-time work, to supplement their business income if needed.
Additionally, they establish a network of mentors and advisors who can provide
guidance and support during challenging times. By having a well-thought-out
contingency plan, the individual can navigate the uncertainties of entrepreneurship
with greater confidence and resilience, ensuring they have a backup strategy to rely on
if their business faces difficulties.

In conclusion, risk management is a vital process that involves identifying,

assessing, and mitigating potential risks in various aspects of life. It goes beyond
financial risks and extends to personal health, safety, and overall well-being. By
implementing effective risk management strategies, individuals can enhance
their financial security, protect their assets, and prepare for unexpected events.
Whether it's establishing an emergency fund, having appropriate insurance
coverage, or developing contingency plans, proactive risk management allows
individuals to navigate uncertainties with greater resilience and peace of mind.

77
 CHAPTER 10

Facing the complexity of work and pay:

Career, Employment, and Income

This chapter will assist you in determining your ideal job path in the financial
domain.

A rewarding and interesting career option is working in the financial industry.

Depending on your background and skill set, there are a variety of positions you can
hold in the financial sector. You’ll be able to select a profession that best suits you
if you are familiar with a range of financial positions.

Why pursue a career in finance?

The sector is Growth opportunities

dynamic. are constantly available.
There is always something new to A profession in finance offers several
learn because it is evolving and opportunities for advancement.
changing continually.

There are several It's thrilling, resilient,

professional paths and fast-paced.
You will never feel restricted since It's an interesting industry to be a
you have so many potential part of if you enjoy a challenge and
employment possibilities. problem-solving.

One of the most Opportunities all

secure job paths. around the world.
Financial jobs are constantly Companies are growing to different
accessible, and the need for financial parts of the globe as a result of
candidates is increasing fast. globalization. It's time to relocate.

78
Top Finance Career Options

If you wish to specialize in finance or establish a finance career in financial

professional position, you have a lot of possibilities. Explore the top financial
careers or finance jobs
Authorised Persons

Any person who is appointed as such by a trading member and who provides access
to the trading platform of a stock exchange as an agent of the stock broker is an
Authorised person.

Role of an authorised person:

Authorised persons play various roles in different contexts, including their roles in
the stock exchange, with stockbrokers, and with investors.

With the stock exchange:

Authorised persons, although not direct members of the stock exchange, obtain
their franchise from a stockbroker and act as intermediaries between the stock
exchange and the clients.

With stockbrokers
Authorised persons work under the banner of stockbrokers and are responsible
for maximising deals in their assigned area. They help in managing investor’s
investment and aim to increase business volume

Authorised persons ensure the integrity of the capital market by preventing

investors from submitting incorrect or fraudulent documents to the
stockbroker

They work closely with stockbrokers to maintain proper documentation and

transparency in every transaction. They act in the best interests of clients
regarding dividends, shares, bonus rights, and other assets

Authorized persons keep stockbrokers updated about their clients' transactions

and provide sales notes on behalf of the broking house.

With client
Authorized persons assist clients in making informed investment choices and
provide support throughout the investment process

They provide investment tips, market news, and guidance tailored to client's
needs and financial goals.

79
 Authorized persons maintain relationships with clients, keep them updated on
deals and offers through regular communication, and provide ongoing support
and assistance in stock trading.

Eligibility Criteria for Authorized Person Appointments

To be appointed as an Authorised Person (AP), individuals or entities must meet the

following eligibility criteria set by SEBI/Stock exchange:

a. For Individual
Applicants must be a citizen of India

The minimum age must be 18 years or above

No convictions for offences involving fraud or dishonesty

Applicants should possess a good reputation and character

Minimum educational qualification of passing at least 10th standard or

equivalent from a recognised institution

Individuals must have adequate office space, equipment, and manpower to

effectively carry out activities on behalf of the Trading Member.

b. Partnership Firm, LLP, or Body Corporat

All partners and directors must meet the eligibility criteria for individuals as
mentioned above

The Partnership Deed or Memorandum of Association must contain a clause

allowing the entity to engage in the securities business

Adequate office space, equipment, and manpower should be available to carry

out activities on behalf of the Trading Member

These eligibility requirements ensure that authorized persons maintain the

necessary qualifications, character, and infrastructure to responsibly perform
their roles in the securities business

SubBroke
A sub-broker is an intermediary in the securities market who acts as an agent or
representative of a stockbroker or trading member.

80
 Sub-brokers are authorized by regulatory bodies such as the Securities and
Exchange Board of India (SEBI) to assist in executing securities transactions on
behalf of clients.

Function
Sub-brokers provide guidance and assistance to clients in executing securities
transactions

Sub-brokers offer advisory services to clients, providing insights and

recommendations on investment opportunities, market trends, and portfolio
management strategies

Sub-brokers build and maintain relationships with clients, addressing their

queries, providing regular updates on market developments, and assisting in
resolving any issues or concerns

Sub-brokers ensure proper documentation and record-keeping of client

transactions, maintaining accurate records of trades, contracts, and other
relevant documents.

Eligibilit
The person should be of 21 years of ag

The applicant for the sub-broker ship needs to have at least cleared 10+2
examinations

For the Equity Subrokership, Applicants are required to pass the following
exams:

1. NISM Series XI: Equity Sales Certification Examination

2. NISM Series VIII: Equity Derivatives Certification Examinatio

And for the Mutual Fund Subbrokership, Applicants are required to pass the
following exams:

1. NISM Series V A – Mutual Fund Distributors Certification Examination

Should not have defaulted on any other stock exchange

Insurance Agent

An insurance agent is a licensed professional who represents an insurance company

and serves as a direct point of contact for clients seeking insurance coverage.

Functions

81
 Insurance agents engage in consultations with clients to understand their
insurance needs, assess their risks, and provide expert advice on suitable
insurance options

Facilitating the application process, handle renewals, modifications, and

cancellations

Assisting clients in filing claims and facilitating communication with the

insurance company

Assisting clients in completing the required documentation and coordinate with

insurance companies to issue policies

Insurance agents build and maintain long-term relationships with their clients.

Eligibilit
Candidate must be over 18 years of age

Candidates must have completed education up to at least Class 10 or its

equivalent

An insurance agent has to undertake the mandatory training provided by

Insurance Regulatory and Development Authority of India (IRDA)

Candidates are required to clear the mandatory examination conducted by the

IRDAI

The applicant should be certified by the IRDAI.

4. Business Correspondence

Business correspondents are individuals or entities appointed by banks to act as

their representatives and provide banking services in remote areas where the bank
may not have a physical presence.

Function
Acting as a representative of a bank branch in a remote operational area

Assisting individuals in remote rural areas with the process of opening bank
accounts and other services

Facilitating basic banking transactions such as cash deposits and withdrawals.

82
 Spreading awareness about banking services and educating customers about
their benefits

Helping customers complete application forms, including nomination clauses,

and submitting them to the bank.

Eligibilit
Must be a permanent resident of the area in which they propose to operate

A minimum education qualification of Xth pass

They should be well established and should have the ability to invest in POS
machine and other set up

A credit check will be conducted and RCU* verification is done.

RCU verification refers to the process of verifying information and conducting

checks through the Risk Containment Unit (RCU). RCU verification involves
assessing the creditworthiness of individuals or businesses, conducting background
checks, and verifying the accuracy of information provided by customers.

Direct Selling Agent for Loan (DSA)

A DSA, or Direct Selling Agent, is an individual or entity that acts as a referral agent
for banks, financial institutions, or Non-Banking Financial Companies (NBFCs).
The DSA works as an intermediary between the financial institution and potential
customers, assisting in the acquisition of customers for various loan products and
services.

Function
Finding potential customers for the bank they represent

Procuring completed loan applications and required documents from leads

Conducting a preliminary check of applications and documents

Verifying the authenticity of provided documents

Acting as a bridge between borrowers and lenders, leveraging relationships with

financial institutions

Providing continuous support to borrowers throughout the loan process

Addressing borrower queries and concerns.

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Eligibilit
The applicant should be a citizen of India

The applicant should be at least 18 years of age

It is essential for the applicant to have a high credit score or CIBIL score

There is no requirement for a specific degree in finance or banking

The applicant should have a comprehensive understanding of the products they

will be selling.

Agent platforms for financial service

Financial services software encompasses a wide range of digital solutions meant to

help financial institutions and individuals manage their day-to-day operations.

Below is the roadmap for your buying journey

Bank Saathi

BankSathi is a technology-driven platform

that helps customers find suitable
financial products from banks and NBFCs.
It also provides career opportunities as
financial advisors, allowing individuals
from all backgrounds to earn income
flexibly. 

The platform offers a digital advisory

solution for financial advisors to establish
their online presence and sell financial
products online. BankSathi offers a wide
range of 50+ online financial products
from top brands, ensuring customers can
effortlessly compare and purchase the best
financial services available.

84
 Choice Connect

08:34 4G

Choice Connect provides a complete set 4.2 ₹ 4.9K

of tools and information for people

Search by Name/Pan/Phone Number
interested in entering the financial
services industry and becoming a Overview All Time

Financial Service Provider. They offer a Clients Income

variety of financial services such as 415 1.5% +15 16.34L -1.4% -15

loans, insurance, mutual funds,

corporate fixed deposits, and others.
Grab the
reward
Before it gets expire

Choice Connect App is a platform that Cliam Now

allows Choice Business Associates

(Financial Service Providers) to provide Client with birthday 2

their consumers a variety of financial

Business Activity this month
services.

₹ 42,607 ₹ 4.5 CR
Equity Brokerage Net MF AUM

3.NJ Partner Desk

NJ Wealth collaborates with distributors

to offer a wide range of investment and
financial solutions and products to
clients. They provide distributors with
tools, resources, and assistance to
enhance their capabilities in serving
clients' investment needs. 

Nj Partner Desk is a comprehensive

platform by NJ Wealth designed to cater
to the diverse needs of financial
advisors. Nj Partner Desk is a platform
for financial advisors that offers a wide
range of products, collaborates with
leading brands, provides back-office
support, and leverages advanced
technology.

85
 Turtle Mint Pro

Turtlemint is an insuretech platform that

provides digital tools to insurance
advisers so that they may propose the
best insurance solutions to their clients.

Turtlemint Pro is a dedicated app

designed for partners to facilitate the sale
of policies from various insurers across
motor, travel, health, life, and personal
accident (PA) insurance categories. This
app provides partners with a streamlined
platform to offer a wide range of
insurance options to their clients.

Turtle mint also provides Mutual Funds

and Credit Cards

Prudent Connect and Partner Desk

Prudent Corporate Advisory Services

Limited (Prudent CAS) is a prominent
platform provider for distributors in
India's financial services industry. It
specializes in various segments,
including real estate, mutual funds,
insurance, equities, derivatives,
commodities, and fixed income products.

Prudent Partner Desk is a dedicated

application designed for Prudent Channel
Partners. This intuitive application
provides valuable features such as real-
time tracking of clients' investment
valuations and convenient access to
business management information.

86
Entrepreneurship as a Career Path

Not everyone is destined for conventional careers; some individuals possess an

innate affinity for thrilling adventures and possess the visionary mindset to
embark on the exhilarating journey of entrepreneurship and establish their own
successful business enterprises.

Definition of Entrepreneur: According to a French economist, J. B. Say, an

entrepreneur is a person who shifts economic resources out of an area of lower
productivity into an area of higher productivity and greater yield.

Stages of building and expanding the busines

Idea and Market Research

Identify a business idea that aligns with your skills, passions, and market
demand
Conduct market research to understand your target audience, competition,
and potential profitability
Business Plan
Develop a comprehensive business plan outlining your mission, vision, goals,
target market, products/services, marketing strategies, and financial
projections
Determine the legal structure of your business (e.g., sole proprietorship,
partnership, corporation)
Financing
Assess your financial needs and explore funding options such as personal
savings, loans, investors, or government grants
Create a budget and financial projections to manage your cash flow
effectively
Infrastructure and Operations
Establish a physical location or set up a virtual workspace, depending on the
nature of your business
Acquire equipment, technology, and software required for day-to-day
operations
Develop systems and processes for efficient workflow and operational
management
Scaling and Growth
Continuously evaluate your business performance and identify areas for
improvement
Seek customer feedback and adapt your products/services accordingly
Explore opportunities for expansion, such as entering new markets,
introducing new products, or franchising.

87
Startups:

Startup means an entity, incorporated or registered in

Indi
Not prior to seven years, however for Biotechnology
Startups not prior to ten years
With annual turnover not exceeding INR 25 crore in
any preceding financial year,
Working towards innovation, development or
improvement of products or processes or services, or
if it is a scalable business model with a high potential
of employment generation or wealth creation.

provided that such an entity is not formed by splitting up, or reconstruction, of a

business already in existence. Provided also that an entity shall cease to be a
Startup if its turnover for the previous financial years has exceeded INR 25 crore or
it has completed 7 years and for biotechnology startups 10 years from the date of
incorporation/ registration. Provided further that a Startup shall be eligible for tax
benefits only after it has obtained certification from the Inter-Ministerial Board,
setup for such purpose. Further benefits are based on the initiatives and schemes of
the government of India. 

Make in India

'Make in India' is an initiative that started on September 25, 2014, to promote

investment, stimulate innovation, construct world-class infrastructure, and
transform India into a manufacturing, design, and innovation centre. The
development of a strong manufacturing sector is a top objective for the Indian
government. It was one of the earliest 'Vocal for Local' efforts that introduced the
globe to India's manufacturing sector. The industry has the ability to not only
accelerate economic growth but also to employ a big portion of our young work
population.

88
Startup India initiative

On August 15, 2015, the Hon'ble Prime Minister of India, Shri Narendra Modi,
announced the commencement of the "Startup India, Standup India" programme.
The Initiative seeks to support entrepreneurship and promote innovation by
establishing a startup-friendly ecosystem. In addition, on January 16, 2016, the
Hon'ble Prime Minister of India released an Action Plan for the Startup India
Initiative.

The project aims to offer a long-overdue stimulus to the entrepreneurial setup in

India's economic environment.

Atal Innovation Mission

The Atal Innovation Mission (AIM), NITI Aayog, was established in 2016 as the
Government of India's flagship project to encourage a culture of innovation and
entrepreneurship throughout the country. AIM has taken a comprehensive strategy
to this endeavour, ensuring the development of a problem-solving, inventive
attitude in schools and the establishment of an entrepreneurial ecosystem in
universities, research institutions, the corporate sector, and the MSME sector.
AIM's efforts are now monitored and managed methodically through the use of
real-time MIS systems and dynamic dashboards.

AIM has been running the Atal Tinkering Lab (ATL) programme for the past four
years. ATL is a cutting-edge space established in a school with the goal of fostering
curiosity and innovation in young minds across the country through 21st century
tools and technologies such as the Internet of Things, 3D printing, rapid
prototyping tools, robotics, miniaturised electronics, do-it-yourself kits, and many
more. The goal is to instil a problem-solving, inventive mentality among the
students of the ATL and surrounding communities.

89
Prime Minister Employment Generation
Programme (PMEGP)

The PMEGP scheme intends to create job

possibilities for MSMEs in both rural and urban
regions by establishing new self-employment
projects around the country. This scheme is
governed at the national level by the Khadi and
Village Industries Commission (KVIC), and it is
implemented at the state and district levels by
State KVIC Directorates, State Khadi and Village
Industries Boards (KVIBs), District Industries
Centres (DICs), and banks.

SFURTI
Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

It provides aid and support to traditional industry craftsmen in order to foster

cluster growth and provide them with long-term employment.
Hard Intervention: establishing physical infrastructure with CFCs, raw material
banks, and cutting-edge machinery;
Soft Intervention: skill development, market promotion activities, and so on.

It covers up to 90% of the cost of hard intervention and the whole cost of soft
intervention in NER, J&K, and hill areas.

ASPIRE
A Scheme for Promotion of Innovation, Rural Industries and
Entrepreneurship (ASPIRE)

90
In order to foster innovation and accelerate entrepreneurship, ASPIRE plans to
create a network of technology and incubation centres. This will increase the
competitiveness of the MSME sector.

To prepare young people for starting their own businesses and for the incubation of
creative ideas, construct livelihood business incubators (LBIs) and technology
business incubators (TBIs).

For the purchase of equipment, government organisations are only allowed to

spend up to Rs. 1 crore and private organisations only up to Rs. 50 lakh.

For the purchase of plants and machinery, new TBIs are entitled to up to Rs. 1 crore
and existing TBIs can get up to Rs. 30 lakh.

Ace The Interview

Potential employers try to examine the following during an interview:

• Your work qualifications;

• Your "fit" with the company or organization;

• How thoroughly you have evaluated your reasons for applying;

• How clearly you can convey your prospective contribution to the

organization;

• Your "soft skills" such as communication and professionalism.

In other words, the interviewer is curious to know: Why should we hire

you?

Here are some tips to improve your interviewing skills.

Look into the company, its industry, and position - Read the employer's website
and any print materials you may have picked up at job fairs or other hiring events
before the interview.

Know your resume - Be ready to go through every detail on your CV. Keep in mind
that a new employer may only have access to the information on your CV.

Practice responding to interview questions - The saying, "practise makes perfect"

91
unquestionably holds true for the interviewing process. The term "practise" in this
context does not mean that you are memorising answers, but rather that you are
evaluating how you respond to questions, whether you are maintaining eye contact
and seem interested, whether your justifications are clear, and how to relate your
experience to the position you are seeking.

Prepare a list of questions to make to an employer - These questions will both

confirm your interest in the position and provide you with the information you
need to make a well-informed decision.

Be careful to dress appropriately - It's crucial to have a cleaned businesslike

appearance. Anything else will take away from you creating the best impression you
can.

Attire
Corporate
• dark suit with a light shirt or tailored
Dress dress

• conservative tie / simple jewelry

• dark/well-polished, closed-toe
shoes

• khakis or dress pants or skirt

Business

Casual • button-down long-sleeve shirt,

sweater sets, or blouse

• have a blazer handy

92
What you should bring to the interview

Extra copies of your resum

Pen and paper or pad foli

List of references

TIPS: Before the interview starts, turn off your phone! Call, text, or notification interruptions
are annoying and unprofessional.

Don’t Forget To:

Verify the interview's location

Be ten to fifteen minutes earl
Additional copies of your resume with
yo
Shake hands and smile
Make eye contact

Writing a good CV

A CV is an in-depth description of your achievements and academic and

professional qualifications.

Recommendations

Here are some recommendations for writing the curriculum vitae:

Contact information

Check to see if the prospective employer has a means to reach you. Your full name,

93
contact information, and email address should be included.

Photo

Try to find out whether include a photo in an application is common for the
position you're applying for.

Education

Starting with the most recent, list and date you’re most significant educational
accomplishments. You may also include any professional qualifications you may
have.

Writing a good CV

A CV is an in-depth description of your achievements and academic and

professional qualifications.

Recommendations

Here are some recommendations for writing the curriculum vitae:

Contact information

Check to see if the prospective employer has a means to reach you. Your full name,
contact information, and email address should be included

Photo

Try to find out whether include a photo in an application is common for the
position you're applying for

Education

Starting with the most recent, list and date you’re most significant educational
accomplishments. You may also include any professional qualifications you may
have.

94
 Work experience

If you have a lot of work experience, include your job titles, but be careful to pick
just the most noteworthy roles and accomplishments. Cut out the information
about positions that aren't as crucial for the position you're going for, and
emphasise your most valuable experience instead

Skills

These might include the languages you speak, computer programmes you know
how to use effectively, the class type of your driver's licence, and any other
professional talents you have that are relevant to the job you're looking for.

Eight useful tips

Keep it short … but not too short

Use active verb
Avoid leaving gaps in your employment
histor
Always ensure your CV is up to date
Don’t exaggerate or lie.

95
Task 1

Are the statements true or false? Answer

Including a photo is usually an excellent idea.

When listing your employment experience, put the most
recent position first
The lengthier you’re CV, the better
Using active verbs rather than passive words help in making a
positive first impression
It is preferable not to discuss instances when you were not
employed
On your CV, you should always write the truth
Presentation and minor errors are unimportant; what matters is
the content
Cover letters are useful but not required.

Answers

1. False

2. False

3. False

4. True

5. False

6. True

7. False

8. False

96
Answering interview questions

The interviewer will question you throughout this part of the process to see if you're a
good fit. Knowing what questions could be asked might help you plan out what to say
in your responses. Think about the purpose behind a question. What exactly does the
employer want to know?

Behaviour-based and situational/hypothetical questions are becoming increasingly

common since they are seen to be more accurate indicators of on-the-job success.

Behaviour-based questions

Behavior-based interviews are intended to gather information about how you have
done in the past since previous behavior is a good predictor of future performance.
Interviewers construct their questions around the characteristics and talents they
believe are required for success in a position or organization.

These questions usually begin with phrases such as:

• Tell me about a time...

• Describe a situation in which...

• Recall an instance when…

• Give me an example of…

Common behaviour-based interview themes include

Effectively working under pressure

• Handling a challenging scenario with a coworker

• Using strong judgement and reasoning to solve a problem

• Thinking creatively

• Completing a project on schedule

• Persuading team members to do things your way

• Writing a well-received report or proposal

• Anticipating future difficulties and devising preventative measures

97
Answering behavior-based questions: w5 model

The W5 model is a good way to answer a behavior-based issue. The response should
take roughly 90 seconds (the average attention span).

70 seconds - Identify the skill/knowledge/ability and describe how you used or

acquired it by saying

What, Who, When, Where, Why, and Ho

What the successful outcome was

20 seconds - Restate the skill and describe how it will assist the interviewer's
organization.

When asked, "What experience do you have organizing projects?" as an example, you
decide that the qualification being assessed is organizational abilities. You may say,
"Working on two significant projects has allowed me to greatly improve my
organizational abilities. Six months ago, the one I'd like to tell you about was
successful.

You must be truthful in all of your statements! Don't exaggerate or

deceive. The project you pick to support your claim should ideally have required skills
comparable to those needed for the usual project the potential employer wants you to
plan. Try to select a related tale from your academic, extracurricular, or volunteer
activities if you do not have a comparable experience to share.

Situational/hypothetical questions

Situational and hypothetical interview questions are used to determine how you
would respond to and handle work-related circumstances in real life. Candidates
must have a thorough awareness of the position's requirements and be able to
respond to hypothetical or situational inquiries.

Here are a few examples of this kind of query:

Describe how you would stay active if your direct supervisor was unavailable but you
had reached your project deadlines.

98
 • As the manager of a small marketing team, you have noticed that one employee
always arrives late and often takes long breaks. What method of action would you
take
During construction, a contractor unexpectedly finds a very large object in one of
the trenches where he is about to dig. He requests that you tell him how to
proceed. How would you deal with this situation
You organise a session for showing word processing software to new joinees. Only
four individuals have enrolled, which is unfortunate because you need a class of at
least 10. There are still five days till the start of the class. What would you do
You have a conflict with someone who is senior to you and is not your supervisor.
Describe how you would handle it.

Paws model: answering classic questions

The PAWS model is a helpful technique for responding to common queries like "Tell
me about yourself." The response should take around 90 seconds (the average
attention span).

When a potential employer asks you this question, they are searching for information
about your life that is pertinent to the position, such as how you first became
interested in the industry, previous work experience, and educational pursuits.

Profile, Academic, Work, and Skills are all abbreviated as "PAWS". To demonstrate
your suitability for the position, mention any combination of the four (in any order).
Just like with any other interview response, keep your response to a maximum of 90
seconds.

Following are some examples of topics to cover in each of the four categories:

Profile: Explain how you became interested in this area of study. You could also
mention any related extracurricular activities, memberships, or personal pursuits
that you have that show your dedication to the subject.

Academic: Describe your educational history, including any degrees, certificates, or

certifications you have earned, as well as any associated training programmes or
courses you have taken for professional development.

Work: Highlight any relevant paid or unpaid experience.

99
Skills: Mention particular technical abilities relevant to the job or industry (e.g., C++
programming, GIS expertise), as well as applicable transferrable abilities (e.g., time
management, problem-solving abilities).

Do’s and Don’t

DO’
Create a budget on a timely basis and monitor your expenses
Make regular investments to improve your financial situation
Assess risks and make investments for a better future
It is important to create strong and unique passwords for your online
accounts and update them regularly. When choosing a password, use a
combination of letters, numbers, and symbols. Avoid using easily guessable
information such as your birthdate or name
Make it a habit to regularly check your bank statements, credit card
statements, and other financial accounts for any unusual or suspicious
activity. If you notice any transactions that you didn't authorize or
recognize, contact your bank or credit card company right away to report
the issue
Stay informed about common fraudulent schemes, like phishing emails, fake
bank calls, lottery scams, job scams, and investment frauds. Be aware of the
latest scams and tactics used by fraudsters to protect yourself
Before sharing personal information or making financial transactions, always
make sure to check if the source is genuine. Verify the legitimacy of emails,
phone calls, or messages by directly contacting the organization using
official contact details
Remember to regularly update your password by changing it frequently.

Link your mobile number and email address to your bank account and
choose to receive SMS or email alerts. This way, you'll be notified of any
updates or transactions related to your account
If you notice any strange or unauthorised transaction, contact your bank
immediately
If your debit or credit card is lost or stolen, immediately contact your bank
and ask them to block the card

Consider your burden and make timely repayments before taking on

additional loans.

100
DON’
Avoid clicking on any links in emails from unknown or untrusted sources
Never share your credit or debit card details, PINs, or OTPs (One-Time
Passwords) with anyone, including bank staff. Keep this information
confidential and only use it for your personal banking activities
Avoid using public computers, cyber cafes, and unsecured/open networks
like public or free Wi-Fi when making transactions
Never access your bank’s website through online search
Never write your PIN on the Card
Never borrow money for investment
Do not apply for loans without assessing your own needs and considering
the terms and conditions
Do not accept assistance from strangers while using ATMs, and avoid
writing your PIN on your card or keeping it in your wallet
Stay away from investing in speculative schemes that can lead to losses
Spend according to your budget and avoid excessive expenses
Keep your important personal information, like your Aadhaar number, PAN
card details, bank account numbers, and passwords, safe and secure. Avoid
sharing this information unless it is necessary, and be careful when sharing
it out online or over the phone.

101